Cramer: Find Stocks...
Open Question
Mr. Heller,
I am curious about how you feel when you like a stock but it is heavily shorted.
I ask because in my relentless search for net/nets I have come across quite a
few that I like. However, there are a few of them that are heavily shorted (2
have over 30% of their float shorted). I know shorts are usually pretty smart so
it is causing me to second guess my analysis. All the numbers say they are good
companies, the shorts seem to disagree. Any thoughts on this? Thanks!
-Corban Bates
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Corban, great question. It would certainly depend on the company, and in the
case of net/nets, what the assets look like, and whether there's any life left
in the operating businesses. For instance, if there's a large amount of cash
relative to current assets, and the company is not burning through it quickly,
I'd be more apt to ignore the shorts then if current assets was primarily
inventory and receivables. There are a lot of other nuances here, too.
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