Short interest thread... Question!

[dinvestor89]

This stock has been SO interesting!!  This is one of the first stocks I've ever invested in.  I feel good investing in this product, even though my wallet does not feel good.  I believe in this product and my money is here to stay.  That all being said, as a new investor I'd love to ask some questions to see if anyone has interesting responses.

First, here is the latest data from nasdaq.com


07/15/2016

Short Int: 86,152,192

Ave Vol: 2,637,994

Days to cover:  32.658221

This seems crazy to me to have such a high short interest with a stock price of 1 dollar.  Has anyone ever seen this before?  If you have could you please post some examples?  If you know of another stock where this is CURRENTLY happening I'd love to take a look at it.  This just seems so strange to me, once again, very limited experience.  Just seems off.

Second, I've been the "days to cover" swing quite a bit... What does this "days to cover" really signify? I know the basic idea is based on the average currently volume how many days of full buying needs to occur.. but is there any hidden meaning to the "days to cover" that I am missing?  I hope I'm explaining this question correctly.

That being said, I really hope this product takes off!!  It seems like it can help so many people improve their lives.  Novel drugs always take a while to become allowed in the market and it's a shame Sanolfi impeded progress.  

Well if you'd like to educate a young investor, I'd love to hear some perspective in regards to my questions!  

[op2778]

I saw something similar with SIRI. Take a look to it. About days to cover, you are on track. A lot of people expect a short squeeze (means short can be forced to cover their positions and that could cause the squeeze). But honestly speaking, i highly doubt we will see one, just because shorts are covering their position with options. About short squeeze (take a look to porsche and Volkswagen short squeeze history)

[fap]

Great Question I will be waiting to learn too.

[matt]

There really isn't that much to understand about shorting. The days to cover simply shows the ability of the shorts to cover if, in fact, the stock took a massive upward swing because the volume is not there to allow covering. However, what is missing in that analysis is the number of call options outstanding. If, for example, an investor was short 100,000 shares but owned calls on 100,000 shares there really is no imbalance in that portfolio. If the price spikes the investor could simply exercise the call option, take deliver on the shares and cover the short. For that matter, an investor could also use options to construct a synthetic short position that gives the same payoff as a real short without ever showing up in the short interest, so the reporting is not perfect.

As for your observation that 32 days to cover seems high . . . well, there is nothing wrong with your observational powers. There are other stocks with similarly large days to cover ratios, but not very many. What it tells you is that some people have very firm convictions about the likely price trend and the potential for reorganization. If a stock is cancelled in a reorg, it never has to be paid back and that represents the best possible economic outcome for a short. However, it is also a dangerous game to play.

[beardawg]

Aug 1, 2016 15:46:02 GMT -5 op2778 said:

I saw something similar with SIRI. Take a look to it. About days to cover, you are on track. A lot of people expect a short squeeze (means short can be forced to cover their positions and that could cause the squeeze). But honestly speaking, i highly doubt we will see one, just because shorts are covering their position with options. About short squeeze (take a look to porsche and Volkswagen short squeeze history)

Why did the Porsche and Volkswagen short squeeze happen? Didn't they have options back then? Why didn't they cover with options? 

[mnkdfann]

Aug 1, 2016 15:30:41 GMT -5 dinvestor89 said:

This seems crazy to me to have such a high short interest with a stock price of 1 dollar.  Has anyone ever seen this before?

Why obsess over the share price being under $1?

Even now, the market cap of MNKD is still well over $400 million.

Maybe $400 million is nothing to you, but if a short thinks this is going towards zero then it still looks to him as though there is a lot of potential money to be made here.

[dcassidy1618a]

Aug 1, 2016 15:30:41 GMT -5 dinvestor89 said:

This stock has been SO interesting!!  This is one of the first stocks I've ever invested in.  I feel good investing in this product, even though my wallet does not feel good.  I believe in this product and my money is here to stay.  That all being said, as a new investor I'd love to ask some questions to see if anyone has interesting responses.

First, here is the latest data from nasdaq.com


07/15/2016

Short Int: 86,152,192

Ave Vol: 2,637,994

Days to cover:  32.658221

This seems crazy to me to have such a high short interest with a stock price of 1 dollar.  Has anyone ever seen this before?  If you have could you please post some examples?  If you know of another stock where this is CURRENTLY happening I'd love to take a look at it.  This just seems so strange to me, once again, very limited experience.  Just seems off.

Second, I've been the "days to cover" swing quite a bit... What does this "days to cover" really signify? I know the basic idea is based on the average currently volume how many days of full buying needs to occur.. but is there any hidden meaning to the "days to cover" that I am missing?  I hope I'm explaining this question correctly.

That being said, I really hope this product takes off!!  It seems like it can help so many people improve their lives.  Novel drugs always take a while to become allowed in the market and it's a shame Sanolfi impeded progress.  

Well if you'd like to educate a young investor, I'd love to hear some perspective in regards to my questions!  

Could it just be the result of hedging? Didn't they use to offer data to indicate how much of the SI was hedged positions?