Guest Nova Zemlya Posted August 12, 2003 Share Posted August 12, 2003 Comparison Of The Value Of Short Interest AC/WJ on the TSX WJA Short Interest In WJA, As of 31 Jul: 1997420 shares Current Share Price: 21.20 Value of short interest is: $42, 465,149.20 --------------------------------------------- AC Short Interest In AC, As of 31 Jul: AC.A 452,482 shares Current share price: .30 value of short interest is: $135,744.6 AC 8873563 shares Current share price: 1.33 value of short interest is: $12,068,045.68 Total value of short interest on TSX for AC: $12,203,790.28 Conclusion: The short interest in WJA stock is 3.48 times that of AC If trading in AC is eventually halted and the value of the current AC stock remains in the area of 1.20-1.30 right up until that time, then there is no return on your investment on holding short interest in the stock. But if WJA stock sees a correction to its actual value, then you could optimistically expect a return of 60%, as the company is overvalued, despite its optimistic outlook. One must note that even though WJA stock increased, the short interest increased by a good 10% in the meantime. Your guess is as good as mine on this subject! :[ NZ Link to comment Share on other sites More sharing options...
Croc Dundee Posted August 12, 2003 Share Posted August 12, 2003 "But if WJA stock sees a correction to its actual value, then you could optimistically expect a return of 60%, as the company is overvalued, despite its optimistic outlook." WJA is only slightly over-valued at the moment since it has traditionally traded at a multiple of 20x forward earnings. I agree, the downside potential is greater than the upside potential for WJA however it should settle into the $19 to $20 range if the Q3 results are on par with Q2. Link to comment Share on other sites More sharing options...
Guest Nova Zemlya Posted August 12, 2003 Share Posted August 12, 2003 I think that is a very good point. It also underlines the fact that if you hold short now, you are probably looking at interest payments for the near term over Q3 & Q4. But investors have persisted, and are holding on to their shorts (no pun) over the recent fireworks. Much would depend on the ability of AC to reorganize with a real business plan in mind. There is also the price of jet fuel to mull over as well. If the mothercorp can actually demonstrate that it is a business rather than an ATM for its redundant pilots, and a career refectory for its chosen few to engage in tin-pot scheming.. Never mind :[ NZ Link to comment Share on other sites More sharing options...
Guest windshear Posted August 13, 2003 Share Posted August 13, 2003 Let's look into this a little further then. AC has a market cap of approximately $163 million. WestJet has a market cap of approximately $1.6 billion. AC's short interest as a % of the market cap is 7.5%, while the short interest in WJ represents 2.7% of their market cap. That might be a better reflection of the short interest in a company. On a technical note, I believe if you hold short stock and the stock is de-listed, your return is in fact 100%, as you never have to buy it back, yet your sell trade settles. Maybe financial guy can confirm that one, or someone who has had the experience. As for the overvaluation of WJ, I guess time will tell, but there are others that would say it's undervalued right now. Link to comment Share on other sites More sharing options...
Guest Nova Zemlya Posted August 13, 2003 Share Posted August 13, 2003 Yes, you are right about how bullish the stock seems if you base your analysis strictly on the numbers. Technical Chart: http://www.stockta.com/cgi-bin/analysis.pl?symb=WJA.C&num1=11&cobrand= The ratio of short interest to market cap is not a good indicator of how the short position will do. Yes, it looks really good when you compare it with AC, but in reality the amount of short interest against monthly volume is the best indicator of how things may go, not comparing it with another stock. I believe you have to be able to settle your short interest prior to trading halt, which is why I say that the huge short interest in AC may be of no value as it sustains the stock value and trading may just halt without having settled in the meantime. But I would need the advice of a crusty broker on that one, as I am not entirely certain. :[ NZ Link to comment Share on other sites More sharing options...
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