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Wednesday, December 12, 2012
$UNIS - Shorts Getting Bolder
$UNIS - The shorts have finally crossed a major threshold that seemingly borders on insanity. So far they have been right for the better part of two years, but things can change very quickly in the marketplace. One thing that I know is that when that fateful day comes for the shorts to cover there isn't going to be room for all of them on the party boat. The most recent report shows that they have increased their position by another near 600,000 shares in the two week period ended 11/30/12. In the last month their position has increased by just under 1 million shares. Nearly 10% of the short position is now short at less than $3.00. The problem for the shorts is that they haven't been able to drive the price down appeciably since then even with taxloss selling going on. If anything it would appear that their influence on the stock is starting diminish. Will they create resistance if the stock starts to push up, without at doubt. They tried it yesterday a few times, yet the stock continued to find steady buyers. The price increased nicely for the first time in a long time. I think as we turn the corner on this year that trend is going to continue.

Here is where it gets interesting. Sitting at over 10 million shares short, the entire Nasdaq float has now been sold. Assuming no changes in the overall Institutional Holders, you have just under 30 million shares held by them. There are 39 million shares on Nasdaq. Some of those are restricted, so you can see where the short dilemma resides. They seem to be lulled in a false sense of security that the company is going to unload another major fund raising allowing them some easy covering opportunities. I think that they are wrong. The company put in an ATM to mitigate that. While to my knowledge it hasn't been tapped, its there so the company can take advantage of raising capital in smaller bites without a discount to the market that we've seen before. The ATM also puts the shares into stronger hands than a traditional secondary would do because the profit margin is not readily built in to the offering. The firm handling the sales of stock for the ATM actually have to work on selling. Selling secondaries at a discount is easy by comparison.

With Unilife's platforms expanding and evolving there is really no way to know which deal will happen and when. There are several that have entered late stage discussions and that could also provide some needed capital. Shorting right now seems to be a risky proposition, but the shorts seem undeterred. I believe that over the next six months, the long term buyers will start to see their investments come to fruition.
Posted by Stuart Fine at 5:31 AM
Labels: $BDX, $COV, $SNY, $UNIS UNIS Unilife Safety Syringe Medtech Pharmas Biotech Alan Shortall Unifill prefilled, Nasdaq, UNIS
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