Ouch. So that’s what “unlimited upside risk” means.
It never pays to bet against Santa Claus, especially around Christmas.
The same could be said, for that matter, for retail legend Mickey Drexler, too.
Hordes of investors lost their shirts by gambling that the stock price of Drexler’s embattled casual-clothes chain J. Crew would tumble in his uphill battle to boost its sagging business.
The gloom-and-doom betting came from so-called “short sellers” who borrow shares and cash them out. When the stock falls, the shorts use their proceeds to buy new shares at an even lower price and then pocket the difference.
The stock was one of the most heavily shorted issues ahead of the holiday season, with one of every four shares traded in recent weeks in a short-seller play.
But the strategy blew up in the past several days when J. Crew said cash flows from the busy holiday soared to an eight-year high in Drexler’s surprise turnaround.