The sentiment about the stock has been dampened after the news related to the short position by Lakewood. The position is worrying because earlier the company had a long position in the stock. Investors were perturbed by the change in stance. However, some analysts remain positive on the stock mainly based on the future potential of the company due to its pipeline and the numerous acquisition over the last few years. Another important factor is the support of Dr. Frost who has been instrumental in taking to stock to these high levels. He has been a buyer from the open market, and owns a significant percentage of the float. Short positions can backfire in case insiders like Dr. Frost decide to increase their position. On October 31, 20% of the float was short. This increases the possibility of a squeeze. An article on seekingalpha mentioned that the recent correction in the stock is an overreaction by the market to the Lakewood news. The stock may rebound, as it has already done, and move higher based on the potential of the company. The analyst also mentions that the high level of shorts could add to the buying pressure in case of a positive news. Dr. Frost has been active with his other companies as well, and recently Biozone Pharmaceuticals (BZNE) was merged with Cocrystal Discovery where Opko and Teva (TEVA) have a stake. For Opko, the valuations are mainly based on future prospects and the positivity associated with ownership by Dr. Frost. The investments may take time to materialize. Still, the recent performance of the stocks owned by Dr. Frost helps increase the probability of a strong rebound. However, it is good to be a bit cautious, and keep a watch on the volumes. The investors can either book partial profits or tag along with a stop loss.
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