...mate....it boils down to what your view on the fair value is...I am slowly unwinding of my short at this stage...via tapering due to low trading volumes....
...my assessment of the fair value when I opened my short was ~ $0.80..but that was in September....but after the recent half year numbers..it is probably more in the region of ~$0.30/share.
My rationale for that value:
- the net assets is ~$18M at 31Dec...but that includes ~18 months of inventory ($15M) that would probably be partially written off soon... so that leaves a net asset value for the company of $3-10M.
- Then we have a proforma FCF of say $7M/annum at this stage...so assuming BETA risk I've assumed a 15-20% WACC;
- taking all of the above into account, after you have removed all of the other noise, you will end at a fair value of say ~$50M...and that equates to say ~$0.30/share...
...so back to your question...a shorters' bail out' strategy will depend on the shorter's appetite for risk...I am risk adverse...hence my gradual exit these last few days...
...my two cents....
...mate....it boils down to what your view on the fair value...
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