FYI...

Shorts between Jan 31st and Feb 15th increased by an unprecedented 1 MILLION shares to bring the total shorts outstanding to 1.9 MILLION as of Feb 15th. This IS significant depsite some people here dismissing and discounting the importance of this statistic saying ‘the number of shorts outstanding is insignificant compared to number of shares outstanding’. This is a short-sighted and inexperienced response. Here’s why…

Although the 1.9 million shorts outstanding as of Feb 15th is a snapshot in time and does not seem significant compared to 144 million total shares outstanding (i.e. just 1.3%), what is important is the magnitude of the change in the shorts between the 31st and the 15th of +1 million versus the total volume traded during this same period of just 9.9 million. Therefore, ~10% of all shares traded during this time period were shorts! This is significant and would create significant downward selling pressure thus explaining trading here as of late.

The next question is… why is this happening? Common reasons include manipulation and/or pre-selling PP shares pre-hold period expiration, among others.

Most likely these were PP shares being sold leading up to their hold expiration on February 16th, 2008 to ‘lock-in’ some gains (i.e. re-coup initial investment… a very effective strategy of many successful investors). Notice RBC, who was a pro group in the applicable PP, was also 2nd largest net seller between 31st and 15th selling to the tune of 1.3 million shares. Also notice SGX traded between just 23 and 31.5 during this period … who in their right mind would SHORT 1 million shares of SGX at prices between 23 and 31.5 cents?!... not many IMO… unless they were pre-selling PP shares obtained at 14 cents. Makes sense doesn’t it?

The question you need to ask with respect to increasing shorts is… is the increase in shorts due to a legitimate breakdown in underlying fundamentals? ... OR is it due to something else much less serious (i.e. pre-selling PP shares coming due)? The latter seems to be/may be the case here.

Good news is… when this occurs (i.e. PP shares being sold leading up to their hold expiration), the number sold is typically just enough to re-coup initial PP investment. The remaining balance is then held for the ride. Therefore, we may almost be done with being ‘held back’.

Plus news is coming!

red911

Short History
Symbol Report Date Volume Change
SGX - V 2008-02-15 1,925,804 1,073,000
SGX - V 2008-01-31 852,804 312,268
SGX - V 2008-01-15 540,536 50,089
SGX - V 2007-12-31 490,447 92,143