Posted On: 09/17/2012 10:37:36 PM
Post# of 16816
Re: obijankenobi #7500
That was one of Matt's stated intentions: that the companies would have to promise to behave ethically (no share dumping for example).
It wouldn't stop shorting, but it would mitigate the problem since there would be no "air shares" issues.
I don't believe there's any way to stop short selling, it's a bet that market price wil decline due in the future due to current business practices. If you take a simple example it's easy to understand:
Company A earns $100M, has a market cap of $100M with an O/S of 100M and is $1/share.
Company A increases O/S to 200M. With all other factors remaining the same share price should decrease to $0.50.
BCAP is currently undervalued on this basis, but until the Quarterly is released proving it, anyone buying is doing so on the faith of the CEO and the PR's alone.
---
Company A has a new competitor, but hasn't kept pace with market technologies. Sales fall to $50M.
With all other factors remaining the same, share price should fall to $0.50.
This is a future risk for BCAP once it's operating assets are established.
I can go on and on, but the point is shorting won't stop, but it can be mitigated against.
It wouldn't stop shorting, but it would mitigate the problem since there would be no "air shares" issues.
I don't believe there's any way to stop short selling, it's a bet that market price wil decline due in the future due to current business practices. If you take a simple example it's easy to understand:
Company A earns $100M, has a market cap of $100M with an O/S of 100M and is $1/share.
Company A increases O/S to 200M. With all other factors remaining the same share price should decrease to $0.50.
BCAP is currently undervalued on this basis, but until the Quarterly is released proving it, anyone buying is doing so on the faith of the CEO and the PR's alone.
---
Company A has a new competitor, but hasn't kept pace with market technologies. Sales fall to $50M.
With all other factors remaining the same, share price should fall to $0.50.
This is a future risk for BCAP once it's operating assets are established.
I can go on and on, but the point is shorting won't stop, but it can be mitigated against.
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