Thanks, interesting article but really these discussions of shorting the stock seem to not take into account how market makers seem to work acording to market makers.
First, no one can show as far as I know any retail brokerage that will allow naked short selling of a sub penny stock.
Second, even if market maker shorts stock for 1 to 3 days during the settlement period, there is a limit how long they can keep a short position- and any such short sale goes against their net working capital postion analysis thereby reducing their trading ability. Most market makers I have spoken to freely admit shorting such stocks during a 1 day period, but that it is unusual for them to take a risk in shorting much longer or for larger amounts, especially for a low price stock and even more with a stock with a DTC chill.That is what market makers have told me-consistently.
The article you sent indicates the compound effect of selling on thinly-traded shares, but the reverse momentum can also be created.
IMO I cant say that some shorting doesnt on occassion occur, but I suspect in CGFI's case just a question of lack of demand for the stock over those who need to sell to raise cash.Anyway CGFI could look at DTC positions by broker, DTC totals and transfer agent totals and detemrine very quickly if there are any shorts- and eliminate the problem administratively, the fact that companies like CGFI dont do this is perhaps simply they are aware there are no net shorts.But it always sounds great to say they shorts are out there to explain a stock price decline !
Again my opinion is that it is entirely understandable why price is dropping, and that until we have more updated information hard to judge in the short term which way company is going.
