macquarie two dollar price target is a problem

After buying in today at $2.52, I recently sold at $2.97. The reason I sold is the negative impact macquarie's silly $2 price target could have on the stock in the current whipsaw environment.

It seems to me that many analysts who previously had buy/outperform recommendations on AFG are now scrambling to cover themselves to regain some credibility (and perhaps to avoid potential legal action from clients).

Nobody could have predicted the severity of hedge fund short selling on AFG and the collusion with FIN journalists over the last couple of weeks.

The trouble is that even if the low share price was initially unjustified, it tends to take on a truth of its own because the company's low market cap will make borrowing more difficult. Repaying the $250mill in debt due in May will eliminate all of AFG's cash, so AFG really needs the explicit and open support of its bankers right now. Also, while management seem to have a verbal agreement with API for no further margin selling in the short term, if there is no substantial bounce back in the share price, my fear is that API could be forced to start selling again.

I think analysts are now being over cautious, but $2 price targets will provide considerable headwind for the stock over the short term.

Confidence and reputation is everything for a stock like AFG; and AFG's bankers, analysts, related parties, and media need to decide if the company has a viable future. If it does have a viable future (as is my opinion), then everyone needs to start actively and publicly supporting the company; if not, then AFG management need to call a trading halt and prepare for sensible asset sales or find a merger partner.

AFG is in a very fluid situation at the moment, and this situation could change (for better or worse) in an instant.