Trying to squash shorts through a buyback would not be the way to go in my view. You could get the same effect without burning the capital.
My interpretation on why they've failed yet to progress on the many potentially exciting development projects is because they are managing cash outflow to balance sheet metrics, not a calendar. Euro rollout was slower than expected, so it's taken longer to get to the "2 times annual cost coverage" net positive cash that the Chairman wants on the balance sheet as a buffer. They are there now. Spending 15m on a buyback might give a short term share price spike, but would delay the investment required for the long term business development which should drive long term share price development.
US rollout has had some teething issues, but on the whole (judging before we've seen any numbers on it) appears to be progressing well. Cash flow from this, along with the solid but maybe not spectacular European cash flow base, gives them no excuse to not actually deliver on the many fabled development opportunities. Some have criticised them for not gearing up to fund these projects. They've been very reluctant to dilute or endebt shareholders to this point, but from here they have the internal funds so funding is no longer the rate limiting factor - execution capability is. As CUV101 says, they don't have a lot of recent trial execution experience, so risks clearly still exist in that area. For me, it's too early to know if the low dilution/internal funding approach was the right one. In 5 years time if we remain at the head of the melanocortin field, it'll have been genius. If we've squandered our lead, it'll have been a disaster.
So, how to squash the shorts? Attract new investors.
As you say, there's probably not much real demand for the shares right now. Just churn. Most of us interested in CUV have been around it for a few years - decades even in many cases. The emergence of Capital Research on the register early this year was the first evidence of sizeable new buying for years - and great news this was. Management does not generally have a healthy relationship with the secondary share market in my view. The new IR guy says in his presentations they prefer to "be discovered" rather than to promote themselves, and this means, in my opinion investors currently generally buy them only on what they have delivered, and not on the future potential. Other management teams are much better at getting the market excited about the future, and this explains some of the recent financials vs mkt cap comparisons on here.
So, be a bit more secondary market friendly (settle on a strategy, proactively communicate it well with suitable milestones, timelines and metrics) and then tick off those regularly and successfully and I think you'd see a trickle of new investors turn into a river of them which would quickly drown the shorts a lead to a massive re-rating of the shares. Now that management has it's share scheme in place, I'm hopeful the next 2-3 years will be exciting for the longs.
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