Some Size of Short Likely to be Visited upon Provectus Next Week

Certain brokers called certain Provectus shareholders late last week -- that is, the brokerage firms (or "brokers") where these shareholders have their shares of Provectus held -- to see if they, the shareholders, would loan any of their PVCT shares to be used to cover short interests. Although it varied, shareholders were offered low double-digit (annualized) interest on shares.

This information clearly indicates firms/funds/traders are planning to/should/will short Provectus stock in front of what news if any the company may issue next week. This market behavior and potential activity is not unexpected. The share price has run-up considerably, and the company telegraphed it will say something next week (you'll recall the date of January 15th was a byline in the company's December 18th PR).

As a shareholder, you may instruct your broker to not permit your shares in Provectus, or the stock of any public company you also may hold, to be borrowed.

Let's say the interest rate offered to the above mentioned Provectus shareholders was 10%, 11%, etc. This is an annualized rate, which means it's effectively or should be considered having a one-year or 12-month return on investment for the shareholders receiving it (assuming they agree to lend their shares). U.S Treasury interest rates, see below taken from Bloomberg today (these rates are reflective of market rates as of Friday, January 10th), show 12-month or one-year rates are effectively zero percent.

The upshot is that folks who want to short Provectus stock next week think they will be able to make much more than the 10% or 11% or higher they are offering to shareholders to borrow their stock. A 10-11% annualized return for "doing nothing" might seem pretty good to shareholders. It's a very large "risk free rate," in the finance theory sense of the word, when the current, comparable risk free rate is the 12-month Treasury bill rate of effectively 0%.

Why do they think they'll make >>10-11% or more shorting Provectus stock? Because they believe Craig, Tim, Eric and Peter will say nothing or very little next week.

Updated 1/23/14: A reader noted my dates below were incorrect. I have revised them accordingly. Thank you.

Updated 1/11/14 (I previously had written 1/11/13): Blog reader question: Does the potential shorting make you nervous at all? I am worried that the PR will be as subdued as always. Though I think they have no choice but to give an accurate rendition of the minutes...Perhaps the shorts are planning to short an exuberant run-up that runs too high?

No, potential or actual shorting does not make me nervous. I'm comfortable with my investment thesis, which likely is a much longer-termed one than prospective short-oriented traders would have. Yes, such traders also may be preparing to short if exuberance in the stock pushes the share price "too high." I would expect management to say what they can or want to say in any press release issued next week. Whether or not an FDA guidance-related PR is subdued, it would not change the substance of the progress I think they've made as it relates to working towards the approval of PV-10 for melanoma.

Updated 1/11/14 (I previously had written 1/11/13): The brokers are Fidelity.