The best short bets in the world have at least one of two "sure death' characteristics.
1. Product is poor quality or irrelevant. Examples: Eastman Kodak, JC Penny, Blackberry.
2. Scam. Examples: Enron, Worldcomm, Countrywide.
Rarely, do we find the perfect storm where a company has both criteria in spades. COCO is the perfect storm of horrible product where even COCO opposes the 35% success rate rule. They implicitly admit that less than 1 in 3 students will have a successful outcome. If 1 in 3 iPhones worked, do you think Apple would be in business? If 1 in 3 phone calls worked would AT&T survive? And in the scam department, they have played every game to foil the regulators and States AG where virtually every state has filed suit. They have ripped off investors with a $3M CEO salary, overstated assets just as you point out, and plenty of insider trading to steal more of your investor money. They make huge claims, then sell the stock to wanna drink the Kool Aid investors like you.
COCO is the perfect short. It does not get any better or more certain than this. The stock is down over 95% while the market is up almost 100% over the same period. That is just like taking candy from a baby. It should be illegal to short scam companies like COCO. It is too easy. So go ahead and buy more so I can short more. I have taken that deal and won every time for the last 5+ years. Thank you for drinking the Kool Aid.
Well, the jury is back in. Did COCO turn out to be as Daven and I predicted, THE PERFECT SHORT?
Since May 1, when this The Perfect Short was written COCO fell 89.9%. Out of 3,100 NASDAQ stocks, COCO ranks #3,100 in performance (i.e. the worst).
COCO went from $1.17 to 6.5 cents before ending in the low teen cents today (12.5).
I took today's volume, volume I had needed desperately to exit what was at one time 1M shares short and recently still in the low hundreds of thousands of shares to get out of my remaining shares.
So in the end, I have to settle for a 5 bagger in my most recent position at 47 cents. My average exit price was less than 10 cents all told. To get a 5 bagger in just 3 months is just absurd. And I like Daven also was in at $1.17 and got a 11 bagger on that position in just 5 months. Just under $2.6M in profits on this stock over the past 5 years of short positions. COCO was truly the best thing that ever happened to me. No close 2nd. It was a bonanza.
I hope that there are other perfect shorts in the future. It is hard to find that perfect combination described by Daven, namely poor product, scam, and overvalued. I have not seen any such opportunities in the past 5 years, but no major stock has been worse than #3,100 out of 3,100. It was the Perfect Short, and there may not be another perfect short for a long time.
I am happy to be out, and happy that this company will finally meet its end soon in the most horrendous way. BK, Criminal prosecution, delisting, etc. Just nothing but continued horror remains. Today was just a staved off BK bounce. The BK just missed this time. So what. It is still the same company with the same eventual BK.
Good luck to all in your lawsuits, tax write-offs, suicides, etc. I am out of here. My vacation and retirement start today. See ya.