YRC Worldwide Inc (YRCW)

[GuyBig]

I hope you're right.

I do not believe the hedge funds who have invested in YRCW and the hedge funds who have shorted YRCW are the same persons. Most hedge fund managers want to be long or short in a stock, not BOTH.

Being both long and short can be profitable in firms that look like they may go just to the edge of bankruptcy. Hedgers buy the bonds and short the stock, confident that if the firm survives, the bonds will be repaid. Until that happens, the stock will go down. That certainly happened with YRCW.

Most of the time (NOT ALL THE TIME) being both long and short the same stock REDUCES returns and may INCREASE risk. Risk may be reduced, but not cheaply.

The shorts in YRCW think they have a sure thing. With enough capital to stay short when YRCW bounces up, shorting YRCW has been very profitable to short for the past 5 years. That's a very, very long time for it to be profitable to short a stock. That's why shorting YRCW can be very expensive -- Schwab charges 20 to 40% interest against the initial position, does not REDUCE charges when the stock trades down, and marks to market instantly when the stock trades up.

I'm hoping that the earnings reports for the first quarter of 2014 will produce results like the first quarter of 2013 -- s short covering rally that saw the stock go from below 7 to just shy of 37 in just two months. If we get the same percentage move this time, it'll go over 100.

I am not counting on that. But a man's got to dream.

"A salesman is got to dream boy, it comes with the territory."