NextDC put out great results at the back of the Share price weakness ( which i belive because CEO sold his shares on market 4-5 months ago).
As we were approaching to the reporting date, the short position was increasing and now sits at currently 15.2m shorted shares.
Now so far today, after the results, 2.15m shares have been traded.
Now if we assume, that NEXTDC have bottomed ( or so is perceived by shorters - they will need to cover their short position)
Assume all of today's shares buy were because of shorters covering then still ~13m is shorted rightnow.
Which in my opinion will create atleast 15 to 20% upside from here on.
With that theory, I am doing short trade for couple of weeks to see, how far my theory is right.
What's wrong with my theory?
So How did it go?
Well, I started a 15-20 days trade thinking that I will get a return of 15% - as per the logic applied above.
The next day of my buy, Russia started war and market tanked from that point onwards basically my 15-20 days trade now has turned 5 months.
Bad news : it hasn't performed as I expected
Good news: it hasn't performed as bad as the market
As it sits now, It has gained 7% ( not bad in this market at all) - In this period roughly short sellers have bought back 6m shares - which, I belive, has shielded me.
Moral of the story :
Expect something bad to happen straight after you buy however if you make an asymmetric bet (the outcome may not be that bad provided you are happy to wait for a longer period of time)