China-Biotics, Inc. (CHBT)

[viking86]

Roth must be under intense pressure from all the funds that participated in the $75mm raise in Oct 2009 at $15/share (Roth was the underwriter). At $10/sh before the Roth downgrade, these guys who bought over 5m shares in 2009 lost over $25m. One theory is they want to recover their loss by shorting the shares they own and need somebody to further drive the price down to $8 so they can cover. Who else can do that if shorts' bashing has lost most teeth after the Investor Day? (Nevader reported on Yahoo that the Roth analyst appeared very nervous all day on the Investor Day and was looking for any possible flaw to dig in. He was also looking for another job!).

Another theory is these funds needed another catalyst to push the stock down so they can further lend their shares to shorts at a hefty 20%+ fee. If the stock goes down to $8, the speculation is somebody could buy CHBT out or do a M&A at say $21/sh (8x FY2011 eps plus cash=6.50/sh) that would force shorts to return the shares to the lenders that stand to reap a win/win. Anyway the Roth downgrade seems very suspect with very weak reasoning.

Just thinking gout loud.