I have refrained so far from making any comments about the shorting activity on Mesoblast. As well as all the pain this inflicts on those shareholders who sell during a short attack, there is also a major impact on all shareholders. My analysis goes like this:
A shorting attack has the effect of temporarily causing a much lower share price than would otherwise have occurred (selling due to triggering of stop losses and due to fear)
A subsequent short squeeze on good news has the effect of temporarily causing a much higher share price than would otherwise have occurred (buying by shorters to pay back their borrowed shares)
By definition, this means that shorting activity greatly increases volatility in the share price (lower lows and higher highs)
Higher volatility means that all investors will allocate a higher risk premium to that share, resulting in a lower average share price (investors need to see better buying value before they buy to compensate for that higher volatility)
Hence my conclusion is that we all suffer from the increased volatility in the share price caused by significant shorting activity. Even so, I remain a committed shareholder due to the inherent value that I see from my research (and that many don't see because they don't bother to research).
MSB Price at posting:
$1.67 Sentiment: Buy Disclosure: Held
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