Two Short Risks (amongst others)
1. Margin Call - the Broker can require you to increase your total funds in an account as a short position grows to cover additional risk.
2. Forced Buy-ins - (sounds like this is what happened to you, and as mentioned by smaycs4). The broker can call for the return of shares at any time, unilaterally, and you must buy those shares in the open market and return them to your broker. If you dont do it, the broker will do it themselves.
This often happens at inopportune times such as when the share price is increasing and the original share owners (who you borrowed from) want to sell and grab profits. Although its happened to me in the opposite case where the share price was falling extremely fast over a short period of time.
I have followed the company for over the past year. Even with new management in place and under going a turnaround, I can't seem to wrap my head around the current price. It seems to me that current momentum, driven by technical alerts are what is currently moving share price. Any further insight it welcome.
You're just as sleazy as you indignantly accuse me of being. You talk up your book.
I reinitiated a short position, a few weeks back, and continue to add. If you read the last conference call transcript, it is pretty clear that the current quarter is going to have what Rouleau sedulously refers to as "lumps and bumps."
I believe the inside buying by him and the chairman are pulling the wool over the market's eyes, and are setting up for a major disappointment upon the next earnings release.
This stock is FULLY PRICED for any reqsonable prospects of a turnaround now. $1 in EPS is a 20% ROE, and I think it is doubtful they will achieve more than that, at best. Slap a 15-18 multiple on that and you got a $15-18 stock. Even if they do $1.50 in EPS, if you slap a 15 multiple on that, it's $22.50.
The EVIDENCE suggests that the additional sales volume is NOT coming through, with the repositioned merchandising. They are getting more traffic, but a LOWER average ticket. That means the lower initial markups are a double edged sword, and they are giving away margin, as they are getting nominallly more overall volume. The bulls will argue that the consumer needs time to "rediscover" the "new" TUES....and that is possible....but i would certainly say, as far as the Street is concerned, that with the stock in nosebleed territory now, it is do or die time for Christmas.