Kachoo
Regular
Hi DD,Something doesn't smell right, as far as the short position is concerned..
By all accounts (just my opinion) we should have been kicked out of the ASX 300 in the June rebalancing.
Someone had said (which sounded reasonable) that once you are in an index, you are in for 12 months, no matter what, to reduce volatility.
That explains us surviving at least 2 rebalances, but the June rebalance is a bit of a mystery to me..
Unless there were no other companies, that had progressed significantly in market cap and trading volume, at that time, to warrant inclusion?..
What would the effect have been, with such a large short position, on shorters who had to buy back shares, as funds and institutions needed them to sell, as they no longer needed them for index weighting?
Yes there would be selling pressure from the funds, but first buying pressure from the shorters..
If at a time of a turnaround in the Company's "progress" as measured by the market, it could be a real spectacle to watch..
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Are they sleeping well at night and being cool cucumbers?
Who knows, but it's a dance I'd want to sit out..
Many tech companies, especially in the US, where they "should" be better understood, owe their magnificent market capitalisations, to the narrow mindedness of shorting entities.
Something to keep in mind, as we wallow in the current share price predicament.
I have a theory on this short and I doubt we will be kicked out of the Index because the whole cycle will work out and both sides long and short have won.
The shorts yes they sell shares but they are also buying in alternative accounts. Later on when the news us good you will just see a big block trade and all will be covered the institution will have made money loaning the shares plus they have also got a return of capital.
In the end look at it this way if I sold to you at 40 cents 1000 shares then you sold them to me at 39.5 cents then I sold them to you at 39 cents and so forth the only risks is at 40 cents really.
With very little interest in new money coming in its quite easy to drive the price down. The algorithm trades will churn out a positive return with out much interest. The long holding institutions know price will bounce back as the contracts will come they are privy to more up-to-date and accurate data then we are.
My view is that and it's not financial advise is to just buy more when I can and be wait.
If you look at what has been achieved to me it's only time.
One and a half years ago many WANCA's everywhere, today Neuromorphic is the buzz word.
I do believe we have turned the corner on the SP the shorters have pushed hard but in the 30's you do see value buyers buying up shares when they can in my opinion.
Cheers