Canadian stocks listed on the TSX and TSX Venture report short interest twice per month, once on the 15th and again on the last day, with the number being disseminated three days later.
On May 31st 2016 short interest for RVX was reported at a mere 1,500 shares....basically nothing. With each subsequent update the number has climbed slightly: First to 23,200 then 27,000...then 30,633....and then 33,500 shares. The number is now reported at 43,400 up to August 15th 2016.
43,400 isn't a big number, only 0.04% of the 105.2 million outstanding shares...hardly worth worrying about. Of note however is that Yahoo Finance shows average daily volume over the past 3 months as just 17,612....so 43,400 represents over 2 days of trading on the TSX for RVX.
Why there would be any short selling of a company in a Phase III trial for patients with Diabetes Mellitus, one that's trading for less than $1 US, is beyond me. But it is a question worth considering in my opinion.
Short selling is generally considered to be a "bet" that a stock is going to fall in price. Shares are borrowed and sold, with the goal being to buy them back at a lower price, with the short seller pocketing the difference. The best case scenario for a short seller is if a stock goes to $0.00, which means 100% profit.
For the sake of argument we'll say that all 43,400 shares that have been shorted...that they were sold for $1 US by one individual. That would mean that in the best case scenario the short seller could make a profit of a whopping $43,400 USD less brokerage fees if Reservlogix were to go to $0.00
Given the risks with shorting, why even bother? While a stock can't fall below $0, theoretically there is no limit to how high it can go. Being long I consider it very positive that short interest is so low. If around 10 million shares were shorted...or more, that would be a red flag for me.
I would consider it very possible that maybe those selling RVX short, that maybe they know something I do not. But .004% is almost meaningless.
I would consider it very possible that maybe those selling RVX short, that maybe they know something I do not. But .004% is almost meaningless.
It may simply be that Market Maker Broker Dealers haven't had shares to sell when buy orders have come in, and it could suggest that RVX is tightly held. It could also be there are bullish longs trying to accumulate who are selling a small number of shares short in an effort to keep a lid on the PPS and to test the patience of retail shareholders in my opinion.
The last news RVX put out was on August 11th after the Data Safety Monitoring Board (DSMB) gave the company a positive recommendation for the continuation of the phase III BETonMACE trial, the goal of which is to prove that Apabetalone will positively impact the occurrence of Major Adverse Cardiac Events in Diabetic patients.
The DSMB reported no safety or efficacy concerns.
The DSMB reported no safety or efficacy concerns.
Going forward there are some events coming up:
- Aug 27 to 31 European Society of Cardiology Congress
- Sept 11 to 13 Rodman & Renshaw
- Sept 12 to 16 European Association for the Study of Diabetes (EASD)
- Sept 13 to 15 Biopharm America
In my opinion though, the biggest potential catalyst will come from the futility analysis for the BETonMACE trial. The trial is events based and will be completed when 250 Major Adverse Cardiac Events occur. In this trial MACE is defined as stroke, heart attack or death. The futility analysis is due at the halfway point, 125 events.
If the futility analysis is positive and the trial continues, then in my opinion there is real potential for an explosive move in the PPS from current levels. Of course as a shareholder my opinions should be considered extremely biased....in fact I added a small number of shares to my existing position today.
Good luck
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