Cramer tonight wanted to review a couple stocks that the Short Sellers have wrong; he calls it SHORT BUSTING. This is where there are too many short sellers in the wrong stock under the wrong logic. Cramer said when he used to short he was worried the stock he shorted was actually of value. When the short sellers have to cover in a short squeeze it can really make it move. He looks at the average volume per day and the insider buying.
Cramer thinks Waste Services (WSII-NASDAQ) is one of his plays and the shorts are wrong. He loves waste removal companies. It has the lowest margins and its expenses are higher. It trades at 39-times earnings and others are under 20-times. While it looks bad, 1.5 million shares are short at 5% of the float; but that is 14 to 15 days to cover. So this is a thin stock with too many shorts for him. The CEO and 2 hedge funds bought $66 million worth of stock last year.
WSII just popped 11% in after-hours to $11.65; 52-week trading range is $7.98 to $11.00, so this was already close to yearly highs.
Jon C. Ogg
January 30, 2007
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