Short squeeze21 Mar 2019 09:23
Definition (Investopedia):
'A short squeeze refers to a jump in a stock's price, forcing a large number of short sellers to close their position, which in effect pushes the price even higher.When an investor shorts a stock, he borrows shares from another account and sells them, agreeing to replace the stock at a later date.'
FLaBW:
"There is the possibility that you will see the mother of all short squeezes here."
Tnx for the data link.
13.82% at a disclosure cutoff of 2%. So have all these shorters got it wrong? Or are they correct to bet that they are to gain further from a prospect that the Sirius sp declines more ahead?
Because I think that, though historically shorts opened against Sxx was a majority hedging activity, I don't think that applies much now. I think that not only is a large proportion of the present above the 0.5% UK threshold disclosure (7.29%) is speculative, but that the balance of the non UK disclosed shorting (13.82 - 7.29) is also predominantly speculative and more so. All being position taking on St2 prospects and the delay thereof. Plus there may be more open at sub 2% that remains undisclosed anywhere.
Shorters - particularly those speculating - will always prefer to 'stay under the radar' if they can.
So from 6/9/18 have they got it wrong? Obviously not a good trade, they have not got it wrong. Much in the way of paper gain for those who shorted then now sits on the books. Others can see that play....And as this St2 saga has dragged on there has been a goodly time for more large positions to build up. Now overplaying their hand? Maybe. How does this impact the general sentiment, the PI?
Many in the market seem to think shorters will always know more than them and will have the steer on inside knowledge, but do they always? If this was the case you would not see short squeezes....you do..and often. So they can get it wrong. Just like with any bubble shorting can be prone to that 'chasing the trend' 'herd' behavior. Have I mentioned herds before ;-) ) .
Aisi now (and unlike for the 3m from 6/9/18) for the last few weeks and today the sp is in a daily battle ground of buyers coming in at this price seeing value (at risk) ahead and sellers (selling borrowed shares?) capping any rise. Sellers who presumably have an expectation that the St2 plan either gets delayed. so curtailing the mine build, or fails all together. Both outcomes likely highly negative for the sp.
If however instead Sirius do get a complete St2 deal away, and almost regardless of how 'bad' the 'Additional' element pans out for holders wrt new issue, then this appears to be set for a shocker of a short squeeze, particularly as the potential for such a squeeze is being identified but quite a few now. 10% of Sirius issue is ~500m shares. Forced buying of that many?
I am confident Sirius will soon get the deal. We will see!!
GK. Dangerous times.
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