Technical Olympic USA, Inc. (TOUS)

[deadcat123]

S&P downgrade was already known and factored in last week. Capital restructuring will occur before the end of Jan. this month. The bet is on whether this restructuring involves BK or not. The good news is that TOUSA is currently priced for BK while it has not filed Ch. 11 yet! It'll be a smart decision for smart shorts to cover before the news is released since the pps is still very low at BK level. The risk/reward for shorts to continue holding their position now and wait for the news is not good, IMO. Has anyone noticed that the short position on TOUSA drops from 12 mil shares in Nov to 9 mil shares in Dec? I believe we'll see more shorts covering in a very professional manner next week and toward the end of Jan.

If the restructuring news says anything but no Ch. 11, then we shall see the pps moving back to dollar level very quickly. Then, Tousa will be back on NYSE listing and everything will be great for longs. Shorts' reward for continuing holding their short position now and wait for the Ch. 11 (they have been waiting for Ch. 11 filing for months now) could at most be 15 cents per share at current pps, but their risk could be dollar or several dollars per share of their current profits if they buy-back now. This risk/reward doesn't make any sense to any smart shorts. That's why we saw 25% drop in short position (from 12 mil to 9 mil shares) in a month since the pps fell into BK level. JMO

Have nice weekends!