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#8 - The Top 10 REEsons To Buy Molycorp

8. Pending Short Squeeze (writen before Wed run up)
 
FACT:
 
On 1-14-2011 MCP had 11.2% of the float sold short.
Currently almost no brokerages can find shares to allow short sales.
While REE stock prices have been falling this month the average Rare earth oxide price is up 11.9% since the middle of January.

 
SPECULATION:

Since multiple brokerages do not have share available to short the short interest must have grown since the middle of January. The stock price has also continued to fall during this time which is another indicator of increased short sales. Basically the entire float that is in public hands has already been shorted in anticipation of the initial lockup expiration. So at some point this will be bought back and assume normal shorting levels. Once Molycorp gets some positive news, recalculated earnings assumptions, additional China restrictions, or supply chain deals, then the fundamentals will be in place for an enormous short squeeze. Even the short interest to be reported in mid February that will reveal today's actual levels may be enough to spark the squeeze as traders not even in the stock today could jump in recognizing the situation.
 
Any shares that come on the market due to the original unlock expiration may also add to the short pool. This could put additional pressure on the stock until fundamentals generate the next positive news story.