SurModics Inc (SRDX)

[Democritus_of_Abdera]

Foolish, regarding reasons for increased short position...

I’m guessing that those inclined to short SRDX viewed the January 2008 conference call in much the same way that I did (see #msg-26232757). In particular, the conference call did not provide any reason to expect a near-term breakout in SRDX’s operating cash flow (or reported earnings). In that an overall negative sentiment characterized the market in the first two weeks in February, the increased short position does not surprise me.

In addition, if I was a short player (and I’m not), I would argue that the exit of Koch and Olseth from the insider category represents a possible acute downside should either of them decide to sell or divest a substantial portion of their SRDX stock. Koch, in particular, is known for his charitable contributions. A charity receiving a large block of SRDX stock might be inclined to diversify through market sales.

As Background:

The proxy filed December 20, 2007 listed Dale Olseth with 1406K shares (7.7% of total outstanding) and David Koch with 964K shares (5.3% of outstanding).

Short positions equal to or greater than the 5.8M reported Feb 15 were the norm prior to the Merck collaboration agreement (see http://www.nasdaq.com/aspxcontent/shortinterests.aspx? mode=&kind=shortint&timeframe=&intraday=&charttype=&splits=&earn ings=&movingaverage=&lowerstudy=&comparison=&index=&symbol=SRDX& symbol=BAC&symbol=EXP&symbol=&symbol=&symbol=&symbol=&symbol=&sy mbol=&symbol=&symbol=&symbol=&symbol=&symbol=&symbol=&symbol=&sy mbol=&symbol=&symbol=&symbol=&symbol=&symbol=&symbol=&symbol=&sy mbol=&FormType=&mkttype=&pathname=&page=short&selected=SRDX ).

Note, you will need to copy and remove the spaces at the end of each line in the above url. I added these spaces because iHub's formating would have adjusted the page width of this message to accommodate the entire url, making the rest of the message difficult to read.

My characterization of Koch as being known for his philanthropy is based upon Melrose’s description of Koch at the last annual meeting.