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Nautilus Inc. Message Board

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  • astral_tsar astral_tsar Apr 15, 2003 7:24 AM Flag

    $12.00 in AH?

    One more comment: in my humble opinion, a short squeeze, if it happens, will be much more severe than these 50 cent ticks. We're talking about buying a third of the company here, not just the "marginal share".

    Most of the shorts' only prayer of covering below where they sold is total collapse of the business. (Several of them have actively *boasted* of their dependence on that scenario right here on the board.) How else can 1/3 of all shares outstanding be purchased without the market noticing? Aaaaaand ... well, anything is possible but some things are not very likely.

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    • Good morning Astral.

      You're right, the short squeeze has the potential to be significantly more with, what I guess, is close to 35-40% of the float short.

      I've seen stocks pop 25% in one day, with lower short interest. I'll be happy with my 15% in one week of holding NLS.

      The management revising guidance twice is one of the reasons I'm so conservative in my valuation on NLS.

      My "fair price" is ultra conservative. It's simply revised EPS projections (1.65 x .75 x P/E 10) the 25% discount is just my uncertainty factor... I just worry about worse case, best case takes care of itself.

      The Warren Buffet equation you quoted in one of your earlier post is perhaps closer to the true value of the stock, providing, as you mentioned, management gets a better handle on where they're going.

      Since we both like Warren Buffet's methods of evaluating stocks, I'm sure you like NLS's ROE.

      You might be happy to know that NLS has the distiction of having the highest ROE of any company (major 8,500 stocks floor traded in the major U.S. exchanges) with a short interest over 20..

      Good luck to you.

      • 3 Replies to samurai_stockholder
      • Samurai -- dumb question, where are you getting short numbers? I just take them off of Yahoo, so my latest was 31% of float short on March 10.

        Are you suggesting that the short interest is actually (dare I hope) rising?

      • Samurai: good luck to you too.

        I do want to make it clear to everyone else that while I used Buffett's equation, obviously I have no idea what he'd think about this particular security.

      • Samurai: Good evening!

        Yes, the ROE is what caught my attention. I did not know that it was the highest one, but anybody who has earned 50% on their capital year after year can teach me something! Bad years happen. And that's lucky for me: I would never have bought at $30, too much "future" in the valuation at that price.

        Another Buffettism that might brighten your day: "I'd rather have a lumpy 15% than a smooth 12%." In fact Berkshire seems to oscillate between 5% appreciation and 40% appreciation depending on the year, but that's another discussion!

 
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