Day to day discussions on S/P, page-7571

Hi Wombat, I think you might be underestimating the shorters somewhat. There is little doubt in my mind they are not simply shorting with the intent of making a profit on that trade alone. In my opinion they are using shorts to drive the SP down while they accumulate a hoard of longs at an attractive price.

In the last 13 months while the PLS SP has remained relatively range bound (say 95c – 70c) there have been about 1,850m shares change hands by my calculation. How many of these do you think have been hoarded away and are now tucked safely into various accounts owned by the shorters ? At a guess I wouldn’t be surprised if they have possession of perhaps a third of those, say 600m (towards $500m value).

The number of shorts that need to be covered is now close to 160m so even if a short squeeze occurs the value of 160m shorts will be reducing while the value of maybe 600m shares will be rising at the same rate. It might appear to the uninformed that the shorters are burning but the reality is they will be delighted.

Even if their “hoard” is only 320m shares their long gains will be double what ever their losses on the shorts happen to be.