Australia's largest stock trading and investment forum Australia's #1 stock forum

Shorting should be liked, not loathed, page-2

First 2 Last

Share
Profile

Follow
Bonehead1000

3,690 Posts.

11/06/14

16:47

Post #: 13511637
Share

Originally posted by madamswer ↑

On many threads, anti-shorter rants can be heard being blamed for share price woes.

Me, I take a diametrically opposite view: last month’s shorter is today’s buyer when they move to cover their short positions.

Take RMD, for example: over the 12 months to May 2014, net short positions in the stock rose by around 110m shares (out of a total number of issued shares of 1.4bn, so around 7.5% of the total issued capital).
Over the past few weeks, shorters have been net buyers of around 44m shares to close out their positions.

The result has been an 19% increase in RMD’s share price.

The point being made is that shorters ultimately become buyers of stock.

The reason I like shorters is that they play a very important role in getting overvalued shares return to their point valuation equilibrium (and often below it, which creates opportunities for discerning buyers).

Which is what happened to RMD: the short-selling of the past 12 months created a fantastic buying opportunity in RMD in the earlier part of this year.

Shorters provide a valuable price discovery service to me.

Long Live The Shorters.
Viva The Shorters, Viva!

Expand

Nice in theory Madamswer but I think you may be looking at the wrong data. Here is the ASIC short interest data. There has been no short squeeze. The short interest has hardly moved. Each bar is 2 days as it takes out a lot of noise.
1 Upvote

0 Great analysis

Reply

Top Stories

Listen: HotCopper Wire Podcast 015 – Yeah, we're thinking the IPO market is back

Trump chides Powell as Goldman call for calm. The RBA must be nervous

EVR

Pilot plant next up for EVR at Los Lirios after 'promising' antimony sampling

QAN

Qantas dips on cyberattack news, but no Medibank-tier carnage

Wednesday's HotCopper trends: Trigg $12.5M placement, Domino's shock exit | July 2