Monday, August 15, 2005

Borrowing Baidu.com

In order to sell a company's stock short you must first find someone to loan you its shares. Borrowing shares like this costs money. Here is an article about the market for borrowed shares of Baidu.com. (Hat tip: Trader Mike)

Evidently, borrowing shares to short BIDU is very difficult and expensive. This tells me that there is a large contingent of traders who think shorting BIDU here is a sure road to riches. I am naturally suspicious of such widely held bearish views. I am sticking with my forcast that BIDU will hit 270 over the next 6-9 months.

1 comment:

Catablast! Media Group said...

No way it's gonna happen.

The only thing you'll see Baidu.com do in that time period is shed more than half its IPO market cap.

The stock trades at more than 1,500 X 2005 earnings and we're talking about a company that did less than 2 million in net income last year.

Yes, its a hot Net play in an emerging market, but the bulls will come to light and realize they're paying for pennies with crisp dollar bills.

Catablast! Media Group has a table-pounding SELL rec on BIDU.

If you own it, get out now.

If you're yelling "China, China," it is time for a reality fix.

The stock will be at 60$ inside of 4-5 weeks, if not sooner.

If Google were to buy them, you could see a short lived pop in the stock price, but there's no way, even with all their damn money (2.8 billion in the bank), Google would overextend themselves and pay much more than book value for the company.