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That's a good point, but also keep in mind that Patriot is down from a 52-week high of $82 a share. So from my perspective, the question is not what can bring them higher, but why were they so low in the first place? Peabody, the company that they split from, also had a 52-week high of about $88, and they're at almost $30. Higher EPS, but not enough to explain the gap.
The short interest is simply the number of shares being sold short. People generally look at the short interest ratio, which is shares short as a percentage of shares float (i.e. shares available for public trading). So a 15% short interest means that 15% of all publicly-traded shares have been sold short. A more normal short interest is 5% of float or less (MSFT 1%, RIMM 3.5%, TD 2.5%, BTU 4.5%, you get the idea).
My understanding of naked shorts (somebody correct me if I'm wrong) is that for a short, in order to settle the trade, you need to provide the shares, same way you need to provide the cash when buying. If you don't, it's failure to deliver, and normally your trade gets canceled. I think with naked shorting, you obviously never deliver, but are allowed to hold and eventually close your position without ever settling (or settling at some totally arbitrary time), which is a bit similar to to free-riding in the U.S. which is also banned, unless you're a PDT.
That's the legal argument, anyway - you're opening and closing a position without ever settling it, and that's why it's banned in the U.S. But we don't really have that rule in Canada, or at least it's not exactly the same - it seems to be mostly at the discretion of the brokers, who would have to accept liability for the trade.
So yes, a naked short does dilute the shares and create downward pressure on the stock. I think that's kind of the point. Naked shorting could theoretically be used to do a bear raid and manipulate the price of the stock downward, but it's also the only real protection against pump-and-dump scams that don't have enough shares float for covered shorts. It seems that most of the people who truly despise naked shorts are CEOs of microcap biotechs and other OTC penny stocks, and it's no wonder why, every week there's a new pump-and-dump.
Also, people talk about naked shorts as though people can short infinite amounts, but in reality the amount you can short is limited by your margin. I don't short at all but I know that for a 50% marginable stock you need to maintain a 150% excess margin at all times - that's 100% of the short sale proceeds and 50% of the share price. A lot of the hype about short selling, including infinite naked shorts, unbounded losses, that sort of thing, isn't really an issue in reality because of margin requirements.
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