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29% of the float is short
The latest short numbers are STAGGERING. Currently 29% of the float is shorted:
https://www.shortsqueeze.com/?symbol=EEE&submit=Short+Quote%99
There are only a few possible explanations for the huge open short interest:
1. Shorts look only at history, and have great confidence that Evergreen will never get a plant deal. They believe the company is currently so weak that any more shorting just adds to their future profits, even if the stock is already below $2/share. They rationalize that the stock has been going down for a couple years now, and it's a hopeless business, so nothing will ever break that trend. (Sounds like retarded logic to me, but everybody is entitled to their own opinion.)
2. Shorts are desperate, and are starting to behave irrationally - like caged tigers Their last hope is to "pile drive" the stock further down into the mud, hoping for more investors to walk away, ultimately resulting in total collapse.
(note: I'm open to any other explanations as to why the shorts continue to add to their positions.)
Further consider this: On Friday only 376,000 shares traded - all day. At that rate it would take the shorts roughly 60 trading days to cover - close to 3 months. That's either extreme confidence, or extreme desperation - again judge for yourself. (My own suspicion is that somebody big out there is staking his reputation on this company's failure, and simply can't afford to be proven wrong, thus the irrational behavior.)
Whoever is driving up the short number, it's not likely small retail investors. Most retail brokerages won't let you short a stock below $5, much less one below $2. Somebody BIG out there is responsible for the increasing short interest in this stock.
Now look at the Jan 2009 options chain, which probably better represents overall investor sentiment:
https://finance.yahoo.com/q/op?s=EEE
The put/call ratio on the $2.50 strike is almost neutral at 0.94. However, if you look at the $5 strike, which is currently WAY out of the money, the put/call ratio goes down to 0.14 That's extreme bullishness that simply isn't reflected in the current huge short number.
Investors are highly polarized in their opinions, that's for sure. They're betting that in the long term this stock is either going down the toilet, or going to the moon, with little middle ground. The "down the toilet" argument is rather strange, because nobody in their right mind believes this company is going out of business in the next couple years, even if their first plant deal is further delayed. Evergreen still has money in the bank, and their Buckeye mining subsidiary has never been more profitable. So anybody who is seriously betting against this company needs to be looking out with a multi-year investment horizon. But, with no dividend to cover along the way, shorts could keep their positions open for however long they believe it would take for this company to ultimately fail. (Though sometimes they may pay interest changes to borrow hard to find stock.) And, since the stock has already fallen so far anyway, a short squeeze up to $10 wouldn't be such a disaster if their average basis was back in the upper teens.
So what comes next? Regardless of whether or not you believe a big plant deal is coming soon, you have to admit that there will be extreme upward pressure on this stock if a big plant deal is announced. At that point the shorts would be in a VERY difficult position. The only way they could fight back is by shorting the stock further, spreading bad rumors, outright sabotage, or some combination strategy. In other words, do whatever it takes to drive the stock back down. But, with 29% of the float already shorted, there is a practical limit to how much more shorting they can do. Some sort of dirty trick would seem highly likely in the event of a major short squeeze, so get ready for it.
One more thought. Some of the bashers would argue that the shorts have already won this game. (Probably the same bashers that wrongly predicted that k-fuel would never see the light of day, much less achieve many successful test burns which major power producers, as Evergreen did.) But the game's definitely not over yet for the shorts. Far from it. To win at the game of big-time shorting, you first have to cover. Until then, the game just gets increasingly risky.
To me, the risk/reward ratio for owning this stock has never looked better.