I'm not in favor of either dividends or buybacks at this point. Since Raj has not been very aggressive on either option, I have to assume (speculate) he is not in favor of either of those options as well. So how does he fight the shorts?
I would like to propose an LBO (or taking SPPI private) as perhaps the last option. I would appreciate the thoughts from the board members about the following scenario:
Assume the PPS drops to $10. Raj then comes out with a proposal to take the company private at a 25% premium with a PPS of $12.50. I think this would draw a significant outrage from all the investors and force a serious discussion about the true value of SPPI. This would draw attention from a lot of the major trading houses and my guess is there will be an immediate spike in PPS to say anywhere between 15 to 25 (still way below the true value). Raj can safely remain quiet about the LBO proposal as the discussion would entirely focus on the value of SPPI and not on what caused the discussion. Eventually after six months he can quietly withdraw the LBO offer.
If the PPS does not spike and Raj is able to take SPPI private at 12.50 he wins. If the PPS jumps up significantly (most likely scenario), he still wins. The shorts will be dealt a severe and hopefully permanent blow. All the longs will rejoice and will live happily ever after:)
LBOs are never in favor of the longs, the only folks who make money on an LBO are the insiders. Insiders in this case are happy keeping the Co. public as they can and have used SPPI as personal ATM machines.
I am obviously not in favor of an LBO. Also, do not assume the St. is going to revolt I doubt there is a lot of interest in SPPI.
Time is on the side of longs, so patience is a virtue and eventually it will defeat the shorts..