Whenever I read a post about shorts being squezzed it makes me laugh. This short probably knows more about this Company then all of us put together. Consider- he had a chance to cover in the 5 to 6 range a few months ago and didn t cover. The most he can make at that point is 6 points if the Company goes off the air and his risk is infinity.The stock runs back up to 11 and he looks stupid- then the revenue, auditor mess news hits (you think maybe because he has read every line, every footnote in the 10Q and everything else the Company has put out he had an idea this was lurking?) It certainly would explain why he didn t cover. IMHO this short has a better understandiing and feel for this Company then any of us and I think his actions prove that. As long as he stays short I am very worried.
Laugh all you want. It happened at VMW a couple weeks ago, it will happen here.
Most times when the short does such a great job it is generally only in one of two situations. First, he is good for a short-term issue. Case in point - Jim Chanos on HP. The guy was short, calling it a value trap at $17 last year. So the stock cratered down to $11 when the Autonomy mess was made public. What's happened since then - go look at what HP trades at today. Do we hear Jim Chanos crowing now about HP? Of course not. Second case where the short is right is where there is a material issue of fraud and the short has uncovered it - like Enron.
Now, what do the shorts have on MXWL at this time? All they have is this revenue recognition nonsense, nothing else. The company provided the facts, the extent of it, and it isn't a big deal. Yet it warrants taking 50% off the stock? Of course not. Again, go take a look at Tech Data - exact same situation disclosed last week.
In the end, the shorts have to cover unless the stock is going to zero. I'm quite certain that's not the case here. Big deal - $5 million or $6 million a year in revenue was shifted - the sales were made, and they are certain the money will be collected. So you tell me, what's the big problem? There isn't any. Summer last year, remember the analyst who made the big stink about the China company? Remember the stink he made, the publicity it attracted - and what came of it? Absolutely nothing - the guy was dead wrong, but it took 50% off the stock then too.
This is all nonsense. I own my shares, the short does not. He relies on the fact that weak shareholders can be scared out of their shares. Most who could be scared out of their shares and had purchased at $10 and higher recently probably did toss them and move on. The smarter ones averaged down, and the remaining shares have been distributed to other, new shareholders.
Shorts will have to cover as the stock begins moving up again - they get scared too.