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VMware, Inc. Message Board

  • eyesandears51 eyesandears51 Jan 29, 2013 2:33 PM Flag

    Will VM Ware well with Investors?

    The "Bear Essentials":VM stock has dropped 21% based on a managements negative federal government sales outlook, and questions about VM's "cloud play". That is the bad news and certainly reflects disquiet from shareholders. Furthermore, 12.9% short as a percentage of float is high, whose investors have a strong interest in pushing the stock lower.

    The " No Bull Case ": Insiders and longer term institutional investors own well over 2/3 of the stock. These insiders, including officers, directors, and beneficial owners, have been aggressively buying shares. The company has nearly $4.5 billion in cash and could make transformative acquisitions, or declare a dividend. The later would meaningfully increase the cost of holding a short position. Collectively these capitalization items could create a short squeeze for the shorts on any increase in share price. The shorts will need to buy those shares if the stock price rises. The selling pool is limited by the large insider/long term holder base, hence a real possibility of significant near term short squeeze enabled appreciation.

    Comments and alternative perspectives welcome.

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