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Procera Networks, Inc. Message Board

  • du4sloop du4sloop Apr 25, 2013 11:02 AM Flag

    Stock buyback = Squeeeeze!

    Some compelling arguments have been made by some of you in regards to a stock buyback , so much so that I have had to re think my position. With only about 3m shares in retail hands and close to 2m shares sold short, if Procera announced they were going to deploy say $20m to buy back stock, close to 1.8m shares at todays price, I for one would immediately grab a big handfull for myself and I'm sure I wouldn't be alone. With a rapidly shrinking supply of shares needed to cover, the shorts would indeed be squeezed or perhaps crushed is a better term even with some who are underwater exiting as they recover those losses. We can only hope. GLTA.

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    • There is certainly a lot of price tension building up between shorts on one end and institutional owners like Blackrock on the other. It seems like a significant buyback, like you mention above Sloop, would have short squeeze effects. Thinking about other scenarios, I would think that institutions that are already heavily invested, like Blackrock, would not only be motivated to trigger a squeeze but would have the means to do so. Using Sloop's above numbers as an example, it seems like Blackrock could trigger a squeeze effect by adding that number of additional shares, and, the price increase would directly contribute to the value of the shares they already own. It further seems that a sudden surge of buying on their part would drive up the price of their existing shares but they would be paying a premium for their new accumulations. Alternatively, they could slowly accumulate, under the radar, until the shorts find themselves in a position of low supply for covering their positions. Based on recent data, I tend to believe that the later scenario would be more likely.

 
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11.50Jun 4 3:59 PMEDT