Posted On: 10/08/2012 8:49:29 PM
Post# of 16816
What stops all shorting is the unlimited loss potential when the stock price rises.
If you invest $100k as a long that's the most you could lose (100%). With shorting there's no potential loss cap (could be hundreds or thousands of percent).
As $BCAP acquires operating companies and then generates revenues, shareholder value increases. Two potential outcomes with the same end effect:
- huge interest and $BCAP appreciates rapidly
- limited interest and $BCAP acquires its undervalued shares
Both scenarios force the shorts to close when the losses are very high.
As to why $BCAP isn't buying shares now since they're undervalued: it needs to focus on acquiring operating assets and regulatory paperwork (audit, S-1, etc.). The operating companies will be accomplished at some point and the focus will change to other issues.
If you invest $100k as a long that's the most you could lose (100%). With shorting there's no potential loss cap (could be hundreds or thousands of percent).
As $BCAP acquires operating companies and then generates revenues, shareholder value increases. Two potential outcomes with the same end effect:
- huge interest and $BCAP appreciates rapidly
- limited interest and $BCAP acquires its undervalued shares
Both scenarios force the shorts to close when the losses are very high.
As to why $BCAP isn't buying shares now since they're undervalued: it needs to focus on acquiring operating assets and regulatory paperwork (audit, S-1, etc.). The operating companies will be accomplished at some point and the focus will change to other issues.
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