All this talk about the mythological Naked Short Sale (nss) and the eagerly anticipated short squeeze does not take into consideration a few key points.
First of all, regardless of the hundreds of companies that claim to be the victims of the mythological nss there has never been a single instance of a naked short squeeze benefiting the innocent shareholders.
Second of all, why is it only companies with poor business plans, no meaningful revenues but excessive stock dumping that cry out that they are being shorted?
Third and most significant. How valuable would a small company be to a well funded corporate raider, even if it had zero prospects for success, if it had a major naked short position?
Think about that carefully. It would be like finding your very own goldmine. Simply by buying up a large position in the company and then announcing some interest in taking the company over, he would immediately force a squeeze. Even if he had no interest in the company at all, he would make a fortune on the stock he owns.
Such companies would be searched out on a daily basis by the equivalent of old time gold prospectors. Millions would be made, fortunes would be obtained...... Yet it never happens.
Are corporate raiders stupid?
Has no one considered the possibilities?
Or is the truth what every sane person keeps trying to tell you. NSS is a myth.
