InterDigital Inc (IDCC)

[hock1]

DShos... You make some very good points about high-speed computers gaming the system. I'd like to add some thoughts:

Yes, the days of the "short squeeze" are essentially over except for the occasional instance when the computer is "tilted". (Good analogy)

Make no mistake, ultimately there are people behind these computers raking in the dough.

MOST IMPORTANT: we need to look at the factors that enable these algorithms to exist.

1) The market used to be a zero-sum game. I.e., certificates had to be delivered by settlement day (long or short sales). Thereby the system inherently recognized the amount of shares actually issued by any given company. The DTCC (wikipedia gives a decent history of its evolution), which was originally set up by the exchanges and the major brokerage firms for the purposes of settling and clearing, for whatever reason, has no mechanism to check and/or track the net number of shares of a company that are represented in the system.

2) The removal of the uptick rule (2007) was a major facilitator for these programs. Imagine how much of a problem waiting for an uptick in order to short would be. (the "flash crash" could not have occurred with an uptick in effect)

3) Currently market makers, on their own or on behalf of a seller, can short an unlimited amount of shares as long as they either a) buy the shares back within T+3 (this is the obverse of "free-riding") or, b) locate and borrow actual shares within that timeframe.

Tough to make money as a traditional "investor" in this environment.