For anyone new who is learning about shorting. Here are a few shorting theories collected over the past several years.
An inverse investor group almost mirroring shareholders exists, except they never own shares. They sell first at a higher price and then buy in at a lower price, just the opposite of what most posters here do. They exist as long term, swing, short term and even day shorters. They can be an individual, a group or even an institution. They are intelligent, experienced and especially good at shorting after a big run or spike. They can quickly kill the momentum of a stock.
They are very well funded and powerful as a group(s). They often have more funding than longs in a stock and have a great influence and ability to depress the price of a security.
Marketmakers simply want to make money on every trade and a shorts money is every bit as good as a longs. Size matters, the bigger the player the greater chance of influencing the MM to move your order, short or long. Many traders blame the MM’s for manipulation when they are simply doing the bidding of buyers and sellers. MM’s have an inside knowledge of what is transpiring with stock sales and movement. MM’s such as the “reputable” Knight Securities have sponsored “shorting funds” in other countries to short stocks and have been caught and fined, although infrequently.
The SEC has a Regulation called SHO wherein they are purportedly tracking all Failure To Deliver shares. You buy shares of a stock but their is no stock available so you buy "vapor" shares. These are now supposed to be tracked even on Over The Counter and Pinks. The numbers are reported monthly.
They are often referred to as the mysterious “hedge funds”. They don’t like publicity or scrutiny. They thrive on secrecy, stealth and fear. They hire paid manipulators in the form of Pumpers and Bashers to manipulate other shareholders. Like MM’s they like stock movement to make money, especially down. At times, they read and follow message boards to gain information and sentiment from shareholders. They love a board with pumpers filling shareholders minds with dreams of $5.00 per share when the actual price is .08.
Stock shorters exist in all price ranges of securities but have great odds of making money in the OTC and Pinks, especially unsolicited Pinks where FTD transactions are extremely difficult to trace. In Pinks, they have power over smaller investors because large established funds rarely buy Pinksheet stocks. This is because of reputation, regulation and economies of scale. A well-funded short group can literally kill an under-funded poorly managed stock.
Shorters often do not know any background information on Pinksheet securities that they are shorting. They prefer securities that have larger share volumes this increases the monies they can earn.
They begin to pay attention to a specific security when they have shorted a significant amount of shares and not gained the downward movement that is typical. This gives them greater exposure to financial loss. At this point they may do some research and track the stock. They can either cover by buying the stock or shorting additional shares to continue trying to suppress the stock. With an unsolicited Pinksheet stock, the amount of shorting can be almost limitless and this is difficult for many companies to overcome.
Any stock which has a quality aggressive management, and assets that are equal to, or greater than that of the shorters is a poor stock to short. Add this to growing future income and you have a stock to avoid as a short. Securities with huge amounts of shares shorted sometimes “squeeze” the shorts when they are unprepared for rapid price escalations caused by a quality stock.
Where does SLJB sit?
SLJB has a good reputation in the Midwest. The have experienced management and have been in business for 28 years. Cash flow is very positive along with PR’d projections showing extreme future income growth. They possess an export license in a very valuable commodity that is needed worldwide. They are acquiring mills to protect the quality and quantity of those exports. They have hired excellent advisors in KPMG and PWC have very a manageable share structure and an excellent market niche. They seem to be very median savvy and communicate events extremely well with their base of shareholders. Their partners have vast wealth and political power in their region of the world. They also appear to have a plan and vision of where they are going. Long term, this is a dangerous stock to short.
All in my very humble opinion.
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