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j2 Global, Inc. Message Board

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  • rbutler96 rbutler96 Jan 15, 2004 5:01 PM Flag

    JCOM is HB in TradeStation

    Gfrank, have you ever seen this on other stocks and what effect did it have. I believe you are correct; no more stocks available to sell short, they can only sell what they own. Surely this would have to be a positive. Does anyone have an opinion on this??????????????????????????????????

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    • High institutional ownership, high short position, oversold stock. I think we are heading higher on anything positive.

    • I think there are still brokerages that will loan you shares to sell JCOM short, but this condition means that JCOM is tipping into the over-shorted (oversold) range. There are a lot of shorts sitting on their position and not enough shares to be loaned out.

      With the recent strong action of the stock, this is a good recipe for a short squeeze.

      This is how JCOM started out last year and as you know it was up over 400% from Jan 1, 2003 before the correction. Short interest was high, and coupled with strong revenues the stock kept going up. As it went up, shorts shorted more until they could not borrow any more shares to short. They were then forced to cover or face monstrous losses, and the squeezing continued.

      There is an extra element of risk with selling short. There is technically no limit to your losses. If you short 1000 shares at $25, a stock could technically go up to $1000, resulting in a $975k loss. Short squeezes are nice (for longs) because there is an extra element of fear when the stock goes up. A long knows exactly how much cash is at risk. A short never knows unless he/she uses stop losses religiously. That it why a short is more apt to cover when a stock goes up than a long to sell when it goes down.

      If JCOM beats their guidance I think it will jumpstart the squeeze process once again.

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