short sellers rampant, page-26

I went short at $1.65 because I believed that their debt levels were unsustainably high, oil assets in the US of varying quality (Gulf Coast ok but overpaid, Umiat an incredibly expensive difficult asset better suited to a company with much deeper pockets), and UCG difficult to value much higher than zero unless the technology advances significantly which will be expensive. All of this led me to believe that a capital raising would have to be done sooner than later to fund very significant cash outflows.
I was very surprised that the company announced a delisting and move to SGX simultaneously with a capital raising before securing the capital by way of a placement with a predetermined price (subject to shareholder approval of course). A shorter's dream come true as the stock is mostly held by retail investors (punters) who wouldn't want to open an SGX broking account and deal with foreign tax issues, simultaneous with an incomplete, non-underwritten capital raising proposal. What better incentives could shorters have to enter the stock? Throw in the head-scratching acquisition of a mothballed nearly depleted coal mine which was uneconomic a year ago (when the coal price was higher than today) facing a large abandonment liability, and the short trade looked unbelievable. Sure enough the stock went through a capitulation not often seen amongst ASX 200 / 300 stocks.
I closed out my position on Thursday after I saw significant bid volumes stack up just above $1. Volatility is extreme at the moment so I was happy to take profits at $1.10, although I see really valuation significantly lower due to the unsustainable debt burden.
I expect a continued bounce for the next few days / weeks but will look to re enter the short trade approaching the delisting date, as retail shareholders who held on hoping for a bounce exit before they get stuck with SGX listed shareholdings.