My theory Gharp is that the shorters, who shorted in the high twenties or even thirties, are prepared to do even more shorting to keep the price down. They are aware that the index funds must rebalance and so the modus operandi is buy the index fund shares for as low a price as possible, What is the alternative? If they tried to rebuy before the index funds have to sell they would be setting the scene for one hell of a short squeeze
There is one elephant in the room with this theory. If there is a predator who is eyeing STX off then, now would seem to be the perfect time to get in with a really good foothold. The predator could just go and talk to all of the index funds and offer say 20 or 21c for every share that the index funds have to offload. I can't see that this would be illegal and what would the index funds do? Sell to the shorters at say 18C or to the predator at 20 or 21c.
Just my theory so everyone is welcome to shoot it down.
STX Price at posting:
18.0¢ Sentiment: None Disclosure: Held
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