What would the upsides of this company be?
Imagine a company with only one line of business that generates revenues and profits and that one line of business is going to expire 3 years from now so they won't have revenues afterwards. In addition, revenues are shrinking due to more competition each year. Assume the company is not going to pursue a new line of business after the 3 years. The company distributes dividends based on its steady revenues. Why would anyone even buy this stock right now? What would be potential pros/cons of this stock in the short and long term?
Do they have anything worth acquiring?
There is literally no upside except for whatever profits are paid out as dividends. Thus, you discount the expected cash flows to you from owning it and call it a day. Frankly, that is much simpler than trying to anticipate the value if the company were trying to expand into another line after words and you have to deal with all that.
There is no long term anything with whatever it is you are looking at... literally.
If only there was this thing called shorting
Stole my response
You'd buy the stock if you think the dividends will pay out more than the cost of the stock to you. I.E. the stock costs you 1,000 dollars, but you think it is reasonable that the dividends will pay 1200 over that time Perhaps it would pay 600, 400, and 200. (I am ignoring pv and all that on that example) The cons of owning this stock is that it's worth is 0 after 3 years. Another con is that it's certainly not guaranteed that the dividend will pay out more than the stock. A possible pro might be that the dividend might more than was predicted because the competition wasn't as bad as was thought. This would give you the choice between taking the extra dividend money or realizing that value by selling the stock that reflects the appreciation due to the dividend. You'd have to use discounted cashflows and IRR(I think) to really analyze it.
There was a rise of 17.5% or 156,688 shares in the short positions. The number escalated from 897,947 on July 15,2015 to 1,054,635 on July 31,2015. The final interest is 2.4% of the floated stock. The days to cover figure of 1 can be arrived using the average daily exchange of 833,963 shares. This is from yesterday's news.
Would it be smart of me to analyze when there were jumps in short interest and see how the stock did right after? I know its technical analysis (and not fundamental), but I feel this is really important?
This is out of my league. I thought you were doing this as an exercise as it reminded me of something I did in school. What is the symbol?
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