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Krispy Kreme Doughnuts, Inc. Message Board

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  • delaurenthis delaurenthis May 23, 2004 2:33 PM Flag

    Due for DEA cat bounce

    "Doesn't common sense also dictate that if
    there are no shares to short, that there
    is a distinct possibility that the "forces"
    are planning on an upward path? Hedgies
    work both ways and could care less about
    company "short-term" fundamentals, its all
    about profit. That's common sense too."

    Hound,

    For a while, when KKD was trading around $60 (unadjusted, about 3 years ago), the stock was going up and it was very difficult to find shares to short. I don't remember precisely, but I am quite confident the percentage of shares short was above 30% (higher than now).

    Consider also that there have been many other stocks with a higher percentage of shares short that weren't saved by the huge short interest. Some names that come to mind include PALM, RETK, and the defunct ETOYS. Conclusion: KKD's short interest percentage is lower than what it has been in the past, and probably not an indicator that the stock "can go up" in a short squeeze. Remember, there is a reason why the short interest has gone up, and it is clear it has nothing to do with an impression that "things will get better soon". Also, consider that a short squeeze typically occurs after there has been a big run-up, and/or there are significant postivie news for the stock. Short of MSFT or GE announcing they will buy KKD, I don't think this will be a likely scenario for a while.

 
KKD
18.84+0.09(+0.48%)Jul 30 4:03 PMEDT