What is the significance of the following statement:
"There are no Canadian short sellers shorting ERHC shares"
So there are 4 potential groups that I can come up with to fit every scenario in our Venn diagram. These are illustrative groups only to demonstrate the logic and do not in any way suggest that I have thought of all possible groups or whether any one of these groups is actual outside of this thought process.
Group 1 - those who have no idea whether there are shorts or not.
This group cannot make the statement.
People in this group can't make any statement because they simply don't know.
Group 2 - actual short sellers
This group cannot make this statement. If they are Canadian short sellers, and they make that statement, then they are misleading others in a conflict of interest which benefits their self interest. In other words, it's fraud.
It benefits their self interest because otherwise, if people, who are not short sellers, know that short sellers exist and that ERHE is heavily shorted, then longs can gang up on the short sellers by concentrating share ownership and refusing to sell. They might also buy other stocks they believe erhc shorts have short positions in, all for the purpose of adding margin call pressure on shorts.
Longs do not have such pressure, if they are not using leverage, and so have an extra advantage. A long can hold a long position indefinitely. A short cannot hold the position if he can't satisfy a margin call.
We saw this happen with Game Stop.
Group 3 - those who are not short sellers but who know that short sellers don't exist.
This group can definitely make that statement.
Group 4 - those who are not short sellers but know they exist. They cannot make the statement either.
Hence, if someone cannot make the desired statement then they are either Group 1, 2, or 4.
But Group 1 will not also try to convince anyone that shorts do or don't exist. Group 4 would try to convince people that they do exist.
The only Group which will both try to convince people shorts do NOT exist (because it's in their self interest) but avoid the statement (because it's fraud) is Group 2. So if such a person exists then they can only be in Group 2.
But if Group 2 people exist, then we must conclude that short sellers exist... because that's who short sellers are... they're group 2 by definition.
Krombacher
