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Compugen Ltd. (CGEN) Message Board

  • sbh3117 sbh3117 Feb 28, 2013 9:43 AM Flag

    Computerized shorting vs. positive company fundamentals

    The battle between computerized shorting and positive company fundamentals continues. At the close of trade on Jan. 31st the price was $5.42. During the period between Jan. 31st and Feb. 15th, the shorting institution/hedge fund(s) shorted an additional 63,000 shares (468,000 total). The stock closed on Feb. 15th at $5.08. Yesterday’s close, you guessed it: $5.42.

    The shorts have wasted a lot of ammunition, and have so far made no progress. The 468,000 x $5.42 = $2,536,560 question: how much more money are they willing to spend trying to keep the stock price down? Over the past year, the shorts have not exceeded 500,000 shares. Is this the limit?

    Certainly, if a deal or two are made for therapeutic proteins this year, the shorts are going to be in a heap of trouble. And as Compugen reported in its Feb. conference call, there is optimism that these therapeutic proteins will be sold in the 2013.

    Let’s see what happens when/if the first deal is announced. How quickly ammunition for shorts can turn into fireworks for longs!


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    • The short position as of April 30. 2013 (released today) is now 899,972 shares or $5,003,844! The short institution(s) shorted an additional 117,000 shares between April 15th and April 30th. The closing share price on April 15th was exactly $5. The share price on April 30th, $5.99 and today at the close: $5.56. The short continues to be ineffective, overall, in driving the price down. If you watch the trading, you will see that the short continues to sell 100 shares lots at the bid price when the stock goes up. On low volume days such as today, the short has some success and panics some investors/speculators into selling. And yet, as we know, time is not on the short’s side:

      “The company plans to announce a pharmaceutical partnership this year, which will generate more revenue, Chief Executive Officer Anat Cohen- Dayag said in an interview at Bloomberg headquarters in New York yesterday.”

      (From the Bloomberg web site, May 1, 2013)

      There is no loss of optimism at the company. Can you imagine the fireworks if/when the company announces the aforementioned deal? The moral of the story, IMO: hang on and/or buy the dips.


    • Yet, another update on this thread. Short interest (released today) as of April 15th is up to a whopping 782,606 shares. The total short position is now $4,280,854.82! And still, the shorting institutions have not made any progress dropping the share price (today’s close: 5.47 vs. (when I first started posting about the short position) 5.42. In other words, that’s an additional 300,000 shares shorted and still no downside progress! Meanwhile, the time before the “anticipated” first therapeutic protein deal keeps ticking away. Computerized shorting vs. company fundamentals—IMO, the showdown is imminent! Stay tuned!


      • 2 Replies to sbh3117
      • To put this short position in another perspective, if the shares were long, the institution(s) who are shorting would have the third largest institutional position in Compugen (only Raging Capital and Clearbridge would have more shares.) Did the people who selected Compugen as an apt "short" target (low cap, low float, high beta, life science co., etc.) listen to the enthusiasm and optimism in yesterday's conference call? Likely not. Tick, tock, tick tock... Very soon, something's gotta give!


      • elbit Apr 25, 2013 5:36 PM Flag

        Normally, I wouldn't put it past the shorts to try some down and dirty shenanigans to try to discredit the company. The great thing is that Martin and the crew have the kind of rep and scruples that the shorts can't mess with. WS wouldn't believe fabricated denouncements or subterfuge. The best they could do would be to buy options and, with enough shares, drive it down to make their money that way. But as you point out, their efforts don't seem very lucrative.

        Sentiment: Hold

    • An update on this thread: short interest is now 626,000 shares (up from 468,000 shares when I last posted —but down from 664,000 shares last month). The price when I last posted: $5.42. The price now: $5.38. Another 155,000 shares shorted for a total drop of 4 cents. In my view, a lot of wasted ammunition. The major reason the shares have been absorbed, IMO: company fundamentals. Each day that passes brings us a day closer to the first “anticipated” deal for a therapeutic protein(s)--on top of the exciting longer term developments within the company…San Francisco mAb’s, Neviah Genomics, etc.

      I continue to be very optimistic about 2013.


    • I do not like shorting but it is a fact of life, the short positions on us are not excessive about 1.3% of outstanding shares. My guess is we are on the low side when it comes to short positions. Also, in the forth quarter our institutional buyers decreased their holdigs in us by 700K shares...don't know if that is continuing, though it looks to me we are being accumulated by someone.
      Since I have held Cgen so long the day to day swings are starting to have less of an impact on my emotional well being. As far as the company is concerned, the very short term stock price is only a problem if we need to raise capital which we don't.
      The more I investigate the more I am sure that we are all going to be happy assuming that the company can fullfill its objective of at least 2 commercial deals with upfront payments, the movement towards an I&D filing for one of our lead candidates and the development of a new platform. We have a terrific story with a large moat protecting us. What cgen has created is very difficult to duplicate. At some point the financial world will see that. Let's hope our managment can acheive its objectives for the year.


    • elbit Mar 1, 2013 10:01 AM Flag

      I used to believe the "liquidity" defense and the "need both sides of the trade" defense but now i am wholly against shorting. I've seen solid companies get mangled and investors who've done good homework get ruined by margin calls. The only thing to cling to is the science and the fundamentals. Love the unflagging optimism here. Shabbat shalom.

      Sentiment: Hold

    • Interesting info, thanks. I'd like to know which hedge fund is gambling with its investors money by shorting CGEN. I'd warn anyone I knew!

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