I want to have a discussion about the short positions on Cudeco on a T/A perspective not on the fundamentals so if we can forget about 300 to 400 trucks per day for a moment it will help.
Short positions opened for Cudeco in 2014 totals 13 695 664 (I have to add daily reports for a year which was time consuming to say the least) Short positions closed for the year were 10 153 161 giving us a increase of open short positions from 6 147 041 to 9 689 544 (there can be an error of one or two days trading)
By getting one of of my sons to input the data I collected in Excel because its beyond me unless doing it longhand. I was able to workout it takes on average 9 to 10 months to totally close out a short position in Cudeco. I could write in all the data but to save me time I will just give you the Decembers 2013. 21% of Decembers shorts were closed out in Jan, 31% by Feb, 40% by March, 50% by April, 55% by May, 67% by June, 79% by July, 85% by Aug and 94% by Sept.
Thats a long period of time to have a short position open when paying interest. There just isnt the volume to close out these position and in a perfect world the shorts would of closed all their positions when the price was low (October/November) but there just isnt the volume.
Opening and closing short positions in Cudeco accounted for 36.139% of the volume produced by the ASX. Without opening new position to maintain the volume I calculated it would take 2.31 years to close the current open positions.
The sceptic side of me says the funds doing the shorting know this and have got the point they are just transferring these short positions between themselves to give the illusion of turnover otherwise when the music stops someone wont have a chair (Ponzi)
The exchanges through out the world believe shorting increases liquidity which from my research I'm in total agreement creating revenue for the exchanges but they also argue it creates a realistic price which to me with the law of averages means less volatility which isnt true because volatility is whats required to make shorting profitable.
I dont wish to short but I definitely need to understand it. I believe in the Cudeco story and wish to hold it and increase my stake but due to personal circumstances the only way I can do that without increasing my exposure via cash injection is after 2 years holding is to trade it and I'm now trending the shorters via excel to know their trading pattern to take everything I can from them. (High volumes in the next two months followed by a price increase)
CDU Price at posting:
$1.35 Sentiment: None Disclosure: Not Held
