Repost on Shorting Opinion
By: ajmanne
14 Apr 2006, 09:08 PM EDT
Msg. 43124 of 43152
(This msg. is a reply to 43119 by roach4091.)
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Roach
OK, since no one else seems willing to answer I will make the attempt.
Say a stock is shorted, and a group of investors hold what is believed to be more than the O/S of that particular stock. If the company gets bought out or moves to another exchange, say from pinksheets to OTC, under these two conditions before either can transpire all stock MUST be accounted for. Now since a group of investors hold more than the O/S for this company, and the MMs that have shorted it must cover their positions, (buy to even out their sells)they will buy whatever is available to do this. If the investors hold out for a higher price, then the MMs will have to pay what ever it takes to even up their books, it is just that simple.
If the investors hold the price will go up because the demand goes up. The demand being the MMs that are short needing to cover. Supply and demand, it all comes back to that.
I and some of the other longs believe this is the unique position that JPHC is in right now. The key to this is that all shares will have to be accounted for.
Even if the shorts have not shorted more that the O/S they still need to even up their books, cover, before the buyout date. Which means for every single share of stock that they've shorted they must purchase a share. That demand will cause a run in itself, how much, it depends on how high the longs are willing to hold.