"So the big money wasn't involved and haven't been since the bottom or for that matter a long long time. So who was buying? The sheep were buying. Well if the sheep were buying, who was selling to them? Ahhhhhh, light bulb huh? "
I suggest that you update yourself with Institutional ownership of WLT first before you throw you assumptions around...
As of Mar-31st, 2013 102% (Yes over 100%) of OS was owned by Institutions (PPS=$28) and the 3 majority holders
1) JPM 11.4%+ (Prob. holding for it's clients & will require only 13G as it exceeds 10%)
2) Harris 6.9%+
3) SAC 5.5%+
They account for almost 1/4th of the float and none of them sold in Q2 (If they did they would have be forced to file 13D or 13G)
13D for Harris & SAC (5% rules),
13G for JPM (10% rule)
Assume that 50% (31 M shares) of the other institutions were selling out of their positions, and the shorts added a whopping 15 M shares, that is a net selling of 46M shares and obviously somebody was buying on the other end. So, your analysis is that "SHEEP" (a.ka Retail & dumb money) was absorbing all those shares??? You might want to re-think your thesis...
A good chunk of Institutions might have sold (Did not want WLT or Coal) on their books at the end of Q2. The smart shorts ($40 and down) might have covered, but new shorts jumped in at lower levels aggressively (Hence, the enormous increase in SI) So, my guess is most shorts will have an average cost of mid teens (If not worse) Now, as a seasoned short trader you tell me what will happen if WLT starts to move up due to any of these positive catalysts (Earnings, Met coal pricing/demand, refinancing, upgrades)
You're really down in the weeds with this. Let me try to highlight what you're saying:
* Institutions own 102% of outstanding stock [you must mean float]
* The biggies; JPM, Harris, SAC did not sell in Q2 [of course we don't know how they hedged; surely they hedged with options or some pair trade]
* Then you say "Assume [red flag] 50% (31 M shares) of the other tutes were selling out....." [I need to stop here because you are assuming that these tutes don't trade. They report a snapshot of their holdings at the end of the quarter, but you don't know how they got there. You apparently are attempting to balance the number of shares bot and sold over a quarter....use lumped parameters....that's not valid imo]
* Then you rhetorically ask "...what will happen if WLT starts to move up due to any of these positive catalysts" and then you have a laundry list.
So I gather your bottom line-prediction is for a short squeeze. Okay.
I did listen to the BTU CEO interview by Kudlow. I gotta say first off that they sounded like a couple of snorting pigs with zero understanding of the dilemma facing the world in terms of resource depletion. They derided Europe for example for raising their costs of electricity by implementing renewables citing their recession. I applaud Europe. I mean at some point we have to, HAVE TO, leave the economic growth model behind. Even John Maynard Keynes said that. At some point we have to transition away from exponential growth to zero growth....it's the simple truth of the human dilemma. If we don't make the hard choices then the forces of nature will exact them for us. So, the obvious purpose of the interview was political, and bad, irresponsible politics at that, to influence public (sheep flock) opinion. I didn't come away, as you did, with the opinion that this was a CEO not about to release bad earnings, etc. On the contrary, he sounded desperate. And now this AM we read they are cutting 5.4% of their Australian workforce. Slam!