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Sturm, Ruger & Co. Inc. Message Board

  • gilgold2 gilgold2 Apr 22, 2013 3:30 PM Flag

    eeeshort positions

    At 4/15 the shorts had my estimate, $80 MM in losses. But in the half-month period 4/1-4/15 they may have made $17 MM. Plus in their favor they've got a market correction. Let's watch the quartery cash-flow growth less cap ex. If it's 60% of the $83 MM special dvd it may be time to buy in again. Until the shorts leave, the stock can function only as a dividend payer based on the last years experience it seems to me.

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    • I believe and have prior posted that the shorts have a long war chest to meet the top bids gapping space to the asks. The last sale recorded ='s the lowest bid. The market maker lowers the ask accordingly and the rest of us sell from concern and from established stops. Over a year ago the shorts declared war taking rgr from maybe an 8% short position to 50% (now down to 26%). They went to a $50 MM profit and 8 consecutive half-month increases of their short position with a few breaks (profits I guess). Anecdotes on this board frequently come up of sell outs because of rgr's mystifying behavior, frequent comments of manipulated price activity; given the stock's strong basics can you not agree with me only manipulation accounts for the above and this stock's neurotic chart. Would you also agree the $4.50 dividend, maybe $83,,000,000 or so of company money was released to fight the shorts. I think the shorts will suffer rising losses and then the stock will be free. Until then I'd love the stock to hold at $48 or so and pay dividends from a growing cash flow.

      • 2 Replies to gilgold2
      • Don't get we wrong. I am not naive. I do believe, as you, that there is manipulation in the market. Sometimes shorts are doing it; sometimes longs are doing it. But it is done for the purpose of inflicting harm on the other although that may be a result. It is done simply out an intense desire for profit.

      • I think you incorrectly view the market as a war between longs and shorts, as though the goal of each is to destroy the other. In that light, you view everything as the result of intentional tactical efforts of one side or the other. To support this belief you ignore economic principles when they conflict with your thesis. Shorts are not enemies of longs. Shorts do not harm longs except temporarily when they are in the act of adding to their positions. Eventually they temporarily help longs when they are in the act of covering their positions. Whether the stock ends up higher or lower depends upon whether it was the shorts or the longs who were correct in the first place about the value of the company.

    • What makes you believe that short positions hold the stock down?

      A long purchase pressures price higher until the order is filled. But afterward, it has no pressure on price. It represents only potential pressure to lower price in the future whenever it is subsequently sold.

      Similarly a short sale pressures price lower until the order is filled. But afterward, it has no pressure on price. It represents only potential pressure to higher price in the future whenever it is subsequently covered. And the knowledge by the market that the shorts are out there and must cover eventually encourages others to buy.

 
RGR
58.11-0.02(-0.03%)Jul 25 4:02 PMEDT

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