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Best Buy Co., Inc. Message Board

  • oldtimer2013 oldtimer2013 Feb 8, 2013 1:31 PM Flag

    I do not understand the logic of holding SHORT at $15

    I can understand not being long at $15. Too much risk.

    But, I do not understand the logic of holding a short position at $15. If a buy-out proposal comes out, when do you think the share price will go to?

    If there is no buy-out, for sure, the share price will fall. Where do you think the price will drop to?

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    • Well most of us shorts do not think a buy out is going to happen. Should it happen , it will be for less than 20 dollars. So at this point the downside is 4.00. On the other hand, without a buyout BBY is destined to be under ten dollars very soon and could easily go the way of circuit city in the not too distant future. BBY used to be busy every time I went in there. Now there are more employess working than customers more often than not. Their niche in the market place is as an overpriced electronics store and it is too late to change their business model now. Any TV they sell can be purchased much cheaper on the internet. So to answer your question, the downside to shorting is 4,00 and the upside to staying short is 15.21.

      • 1 Reply to steve222261
      • @steve,

        Okay, now I understand the short risk & reward equation.

        If what you said is representative of the SHORT CLASS, shouldn't the stock be trading at $10 right now, instead of $15 ?

        You obviously think the % probability of zero is higher than $20. For simplicity sake, just say it is 50% vs. 50%. As such, the expected value today should be $10 instead of $15.

        Is there any reason why you do not SHORT MORE at $15?

    • The key is that is you shorted at 30+, you may want to make your short profit long term since you know it has no way to go back to 30+ anyway.

      If you check the short interest, shorts interest actually dropped.

      The shorted share has been dropping kind of consistently.

      Date Short Interest Avg Daily Share Volume Days To Cover
      1/15/2013 32,160,478 12,566,690 2.559184
      12/31/2012 33,114,424 6,214,548 5.328533
      12/14/2012 33,790,674 15,455,704 2.186291
      11/30/2012 36,933,936 16,109,279 2.292712
      11/15/2012 26,575,567 5,074,435 5.237148
      10/31/2012 29,202,284 5,827,038 5.011514
      10/15/2012 28,724,593 4,448,797 6.456710
      9/28/2012 31,513,166 5,952,936 5.293718
      9/14/2012 32,302,300 5,407,697 5.973393
      8/31/2012 35,183,151 13,653,632 2.576835
      8/15/2012 36,956,034 11,483,482 3.218191
      7/31/2012 40,706,069 7,876,905 5.167775
      7/13/2012 37,789,712 12,139,612 3.112926
      6/29/2012 41,099,352 9,308,393 4.415300
      6/15/2012 45,343,284 10,473,364 4.329391
      5/31/2012 53,293,069 8,940,142 5.961099
      5/15/2012 54,566,410 6,428,171 8.488637
      4/30/2012 53,868,586 6,010,485 8.962436
      4/13/2012 51,617,847 13,846,625 3.727829
      3/30/2012 45,507,373 11,519,074 3.950610
      3/15/2012 47,843,752 4,624,288 10.346188
      2/29/2012 44,787,941 4,178,672 10.718224
      2/15/2012 42,694,939 5,161,126 8.272408

      Read more: http://www.nasdaq.com/symbol/bby/short-interest#ixzz2KKodPxdw

    • my opinion he ain't buying over 16...

      Sentiment: Sell

 
BBY
32.08-0.57(-1.75%)Apr 29 4:03 PMEDT