I would disagree that ADN wasn't ripe for shorting. The signs were all there;
- massive market capitalisation of nearly $700M fully priced in the DSO kaolin output at PER's approaching 21-25x earnings. That left zero upside for the sensible side of the business and the only exposure was downside to commissioning risk
- this price was set upon 100% sales of the product at the stated production rate; a fraction was locked in on binding oftakes and only a minority on MOU's; this was a clear vulnerability
- the price expectations for the kaolin were rosy and optimistic
- it was proposing a giant operation (most kaolin ops are 25ktpa or less) so selling all their product at a premium price it's difficult to a) qualify to all the myriad end-users, b) get offtakes, c) maintain premium prices and simultaneously leverage existing producers out of the market (they have established sales channels and could expand production to fill you in)
- the halloysite hysteria was clearly supporting a chunk of the market capitalisation and share price
- funds would be looking at a downside risk instead of an upside risk; their way of profiting whilst maintaining share of the pie is to lend to shorters to shake the tree and see what falls out
It's called price discovery. If 50M shares were lent and they made 20c a share, someone's banked $10M profit on the short - so far. If you believe the shorts did this AND you believe the ADN price should be 40c, then fill the sells in at 20c guys. It's helping you get more of ADN for half the price.
If, however, punters feel the current share price is actually closer to true value, then it's disingenuous to complain about the shorters Punters should have sold at 40c on the expectation that this would happen, and they could buy back cheaper or twice as much.
Personally, I think the only way out of this is to lock in 60% of production under BOA's and the rest under MOU's, and solidify the ceramics and coatings business. That should see the SP go back toward 30c in, oh, 24 months. It's called an investment.
(20min delay)