why so many shorts??? I understood this situation pre and post PDUFA...and this fall/early winter, we saw the reasonable reduction of short interest - and increase in institutional buying - looked like it was going into a normal mode for this type of firm. But with the DEA delaying classification like this, and short interest increasing back into the 25% range - makes me nervous.
So - why so many shorts - can anyone give me a cogent response?
Sentiment: Strong Buy
Easier and cheaper to cover 8 to 10 versus 10-12. Margin percents are higher (you need more money) below $9. Another break-point is $8. They have kept it under $9 for a while. Briefly over the past 9 months, under $8.
They 'pray' for market meltdown, which would lower all boats. N. Korea? EU (Greece, etc.)? Any thing could happen and they decided to kick the can down the road.
Using options' expirations (with help of options MM) also added to their 'haul'.
Once it's over $10 - for good, a lot of this goes away, IMO.
I hope you are right. It does concern me though that so many are short. That is a LOT of money short. Hopefully will be the mother of all short squeezes. The big short position on VVUS worked for them. I don't see ARNA as pumped up & overbought the way that VVUS was though. So there isn't the same downside potential that VVUS had when it was up at $30/share.
If ARNA pops to $15-$30 range, then clearly they are fools, but until the pop, I can't knock them.
~60M shorted shares = less than 10 days to cover at current avg volume. There would be some volatile trading days for sure - especially if it occured during a hot market week - but I don't think we would see a tremendous increase in share value.
The bigger issue is - how high does the PPS have to go - until the serious longs like me think about selling my shares? I would love to know that answer - that is the underlying value of this stock at this point - with the uncertainty of EU and how initial sales volume will turn out. Throw in the mix a credible/genuine BP offer - then we would see a rapid/sustainable rise in PPS - that is what I am waiting for.
Sentiment: Strong Buy