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Nautilus Inc. Message Board

  • wbaskin wbaskin May 31, 2003 9:31 PM Flag

    why such a huge short interest?

    Would someone please explain why this stock has such a huge short interest? In today's narcissistic society with the emphasis on "body sculpting" and NLS's fit in this picture why would one not think NLS would be a sure thing? 24-Hour Fitness has even starting using some of their commercial pieces and I'm told they're quite happy with the new designs. Just curious and would greatly appreciate any response (other than that this is a POS). thanks

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    • Sorry for the huge ranting reply. : ( A bit of a lost weekend here.

      Why stay short at 5 times earnings? Because the sales drive the price down & paper profits seem to validate the shorting. If it seems to be working, people keep trying it.

    • Well, I'm long, so maybe I'm biased. But here's my 2� ... I think it's an 'antibubble' -- a bubble in negative holdings. Someone eloquent on this board called it "irrational pessimism".

      Why be short when earnings grew 50% for 5 years, and ROE is STILL 30% after a terrible Chronsumermass season?

      There were reasons: Last summer, price is $45 and ttm rptd earnings MINUS serial-acquisition-writeoff-bait gives us say $1.13 owner earnings. 40 times owner earnings. If we can somehow get around that terrifying growth curve (or if we cover fast), it's crying out to us: Short me, baby.

      Ok, so a lot of people shorted above $30 and, sure enough, the stock tanked. Cause, effect, who knows? $14, give or take a couple, since then. Here the shorts parted company.

      After the price tanked, the short interest dropped from about 12.5 million shares to about 10 million & pretty much stayed there since then. ~33 million shares out, so maybe 8% of the company changed hands as about one fifth of the shorts covered.

      So why are the other 10 million shares still short?
      My opinion: Well, you're gonna get some no matter what. But even 3 million (10%) would be high, so who's hanging onto 7 million more antishares?

      My opinion: Like a chain letter, like a bubble, an antibubble is inflated by belief.

      This thinking is exactly what gets people screwed to the wall ... but there's no real use arguing against it (I do, but I'm an idiot, as folks here inform me daily).

      Maintaining a bubble requires maintaining the belief. We all remember the venom directed even at Greenspan, at Buffett, at anyone who ridiculed the excesses of the late '90s?

      "Buffett is a has-been," crowed twentysomething journalists. It didn't matter that he had eaten their grandparents' lunches and their parents' lunches and *told them* that he was reaching for theirs. They wanted to be on the team more than they wanted their money. Nobody listened to him until they heard their OWN lunchboxes imploding. (Well, some of us idiots listened. I spent 4 years in cash.)

      If we were playing Nintendo or Darts or Pinball against a guy who'd been world champion for *fifty f***ing years*, we wouldn't be so cocky. But investing isn't an individual event for most of us. We wanna be on the Team more than we wanna make dough.

      Phhhhbt. So that's my "2 cents". Keep the change : )

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