Tanis, do not doubt your friend, this could be a very real statement happens all the time.
Remember you have accredited US brokers that do not deal in paper or borrowed shares. Then there are those that can.
There are several small exchanges that are not required to report daily sales.These are the exchanges I trade through.
At these locations you can buy and sell shares that don't exist as long as you show intention to deliver the certificates. Rules are murky lets say.
So yes very possible there are no actual shares in the float, that is oversold on paper.