Heavily-shorted stock surprises naysayers
Markets are very sophisticated these days and sometimes it can be difficult to do well when a share is shorted. This, despite when on fundamental valuation, the share offers attractive potential.
Matters are made even more difficult when investors such as BlackRock (BLK:NYSE) hold both long positions and short at the same time.
Presumably they make money on margin and maybe different markets on arbitrage. A frustrating share if ever there was to invest in is IQE (IQE:AIM), although one day, I would hope, the obvious value which it is accumulating will prevail.
Another one is Blinkx (BLNX:AIM), even more perplexing when on the list of short positions disclosed to the Financial Conduct Authority, they all appear closed tonight, yet the price plummets!
Could you kindly investigate a suitable educational article on the practises of shorting, how they impact on the small investor and the strategies the private investor can adopt to win in the difficult markets which pertain to such shares? Thank you in anticipation.
Raymund Adcock, via email
Russ Mould replies: This is an excellent idea and follows on nicely from the debate over Quindell (QPP:AIM) and also our series on activist investors, some of whom go short as well as long. This idea has already been discussed at our weekly editorial meeting so please watch this space.