Isn't it funny that the SEC
investigates a company because of
short seller complaints. Bet the
SEC would care less if we complained
about short sellers!!!!!!! I wonder
who the short sellers are. I am sure
you are aware of the claims of some
companies that their stocks are being
attacked by "naked" short sellers. And
the SEC could care less!!!!! Somethings
not right in the SEC.
I have no current position in either ALD or ACAS for the very reasons you mention.
But, had I maintained my positions throughout these short attacks, I would be very happy indeed with the returns.
Obviously, I've struck a nerve here; but I've really got no axe to grind with ALD. Looked at the stock some time ago and decided the game wasn't worth the candle, given all the brouhaha continually surrounding the stock. (Municipal bond funds pay us a much higher yield with many fewer perplexities.)
I don't know how smart or dumb these hedge fund people are; but I've got to assume that they understand the main rationale for short sales--high time-values. Absent that, I can't really see the point--unless one expects a bankruptcy or the near equivalent: these people appear to be "investing" in ALD, without the essential of investment--namely, ownership.
My rule of thumb for such situations is simple: either you understand them very well--who's right, who's wrong, and why--or you stay away.
The same group is believed to be down between $100 to 200 million on their NFI short at today's price, and will lose well over $ 250 million when they have to cover that position. The name of their game is delay the inevitable, and collect management fees from their investors for as long as they can.
"days to cover" can be misleading.
If there is a short attack that generates a high volume for a day or two, then days to cover drops to what looks like a low number, and stays that way for a month. I look at percentage of total shares short. You can get this at bigcharts.com if you hit the "printer friendly tab".
You may be giving the hedge funds more credit than they're due. They have a less than stellar record recently. Rocker has been shorting ALD and ACAS for well over a year.
He has lead henchmen in Greenberg, the self-proclaimed "financial wizard" journalist and Cramer, the talking head. Both deny any affiliation. Greenberg has been attacking the business model and accounting as frequently as possible. Unsuccessful so far. Both ALD and ACAS have been in business for years. Longer for ALD. If the model was bad to begin with, why is it that the hedge funds just discovered it? ALD and ACAS haven't changed it.
Hedge fund managers aren't geniouses, contrary to the record they claim they have.
Desperation leads to positioning and attacking.
Many remain happy just having Rocker pay them dividends for years.
It doesn't. It only describes "selling" without further specification.
This is all really beside the point. All I was saying was that this stock has attracted a very large crowd of short sellers for a very long time.
Most treat their short sales as a tactical move: they forgo "equity" or ownership for quick, large profits--nothing to fall back on if the position isn't profitable.
All these shorts in ALD are doing something very different--namely, treating their positions as a kind of "investment"; so, they're taking on the short sale risk without the high time-value.
Why? Maybe Marion Polk is right that they're just dumb. Or maybe not.
It's an unusual situation. One rarely sees short interest anywhere near this size, and it's been going on for some time:
These short sellers are running very major risk by maintaining their positions in such a crowd. I assume most of them know this and therefore think they must have a reason to stick their necks out so far.
It seems clear that something has to give in a big way. But what? I'd avoid this one altogether unless I had a detailed understanding of the company.
"Due to the shortage of "borrowable" shares, and the projected cost of the next NFI dividend, we have decided to switch our June 30th attack from NFI to ALD. Since our total short position in ALD is 2.3 times higher, the dividend cost is significantly lower, and there are more "borrowable" ALD shares available, it has been determined that we can better disguise our stupidity by temporarily dropping ALD's value than by continuing our futile assaults on NFI. Please note that "price containment" of NFI should be continued through our June 30th reporting deadline to our bagholder fund investors."