Jim Cramer is a trader, not an investor. He is also acutely aware of what makes (to many) "entertaining" television -- ranting and raving and actingly like nut. His stock picks since he left his fund have been poor as chronicled by a number of websites.
His comments about shorting are just one type of trade -- specifically momentum funds that chase directions and try to use any number of vehicles to follow (or create) trends.
Fundamental investing (long or short) is quite different. As Buffet said, the stock market is a voting maching in the short term and a weighing machine in the long term. Fundamental investors will (and do) hold short positions a long time. Fundamental investors who short are not part of some grand conspiracy to push stocks down. It's just not their game -- they'll certainly outline facts to back up what they believe, but they are not running around Cramer-style like an idiot.
All that said, the Wave stock does seem to be manipulated during periods where financings need to get done. The last 5-6 deals have followed a similar pattern. Positive PRs start flowing, volume increases, the stock price rises, SKS (usually) states there are "no plans" for a funding on a conference call, the number of posts accelerate on these various boards, the stock continues to climb, THEN the funding is announced at a discount to the most recent traded price. If I were Wave management, I might help fuel this too, b/c it limits dilution. However, what appears to be borderline legal is how the PIPEs are getting done. Typically, the stock price would immediately collaspse to the price the stock was issued at to the PIPE "investors/traders" -- leaving little time to capture the spread. In the last 5-6 PIPEs with Wave, this has not happened. Discussions with knowledgeable PIPE attorneys has indicated to me that some PIPE funds are using the disclosure statements in public filings by many small companies to argue that fundings are material, but public knowledge -- a technical definition, but one that allows them to short actively in the days before a raise -- hence removing most, if not all of buying the PIPE deal. Speculation on my part whether that his happening with Wave, but the volume patterns and timeline of fundings seem to support such a theory. Other less legal ways to hedge a PIPE include "naked shorting" offshore (mostly clamped down on), shorting a derivative created by a broker that contains a basket of stocks (including the one being bought in the PIPE), arranging for a "pre-borrow" of stock in advance of a PIPE deal, but not actually going short until the deal is announced, using two funds with different managers one short and one long--but in reality they roll up to the same entitity, etc. etc. In summary, most people putting money in PIPEs are finding ways to reduce or eliminate the risk of the investment -- in most cases, they don't care what the company does--just whether they can find a good way to hedge that the SEC won't jump all over.
