www.OTCShortReport.com May 20th 2012 Welcome to OTC Short Report
We now have seen two examples of what can happen in a short squeeze. When traders win, we see over 100% gains, when shorts took over, it was not pretty.
But what makes a short squeeze even better is when you have a company reducing shares.
For a short to happen, there have to be shares available to short against,
So what happens when a short position is created, but the shares expected to be there to cover the short are being pulled out of the structure by the company?
Which brings me to what GEAR has been doing and why it's amazing:
Gear International Inc ( GEAR )
Follow along here:
November 2nd 2011:
" announces that it has canceled an additional 50 mil Common shares through voluntary stock cancellations, this has reduced the float by 30 mil. These cancellations, in conjunction with the recent cancellations totaling over 1.4 bil shares, have reduced the Company's issued and outstanding stock from a previous total of 1.6 bil shares to a current balance of 195 mil shares. "
March 22nd 2012:
"Gear's board has instructed legal counsel to reduce the authorized common stock from 2,900,000,000 to 600,000,000 and to cancel all class "C" preferred stock by the end of March 2012."
The reduction was completed at the end of March creating this new Share Structure:
O/S 147,905,619 a/o Mar 31, 2012 Float 76,655,299 a/o Mar 31, 2012 A/S 600,000,000 a/o May 17, 2012
GEAR is not just making promises they are keeping them and this is going to put some pressure on the shorts.
Friday GEAR saw a massive volume spike which should have also created a massive short spike to keep up with the average short volume ratio to traded volume, but it was not.
Actually the short volume fell Friday on record volume.
"We have reduced our common authorized shares to 600 mil from over 2.9 bil while reducing our preferred B authorized shares to 600K. We have also canceled the C shares completely. We returned 150,000 class B shares to be canceled and deposited to treasury. GEAR has reduced the common stock through voluntary share reductions 30% from 215 million to 147 million shares."
Seems that with every Press Release GEAR puts out, they are reducing their share structure more and more, and this type of activity will have the shorts running for the door as they know that if they cant cover their positions they could be upside down.
When you have such a squeeze occurring on a stock, combined with the growing volume and buzz, you just might have a monster play here.
Keep a close eye on GEAR and lets see if a short squeeze can occur here.
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