The Problem With Sears Holdings Stock Is…Sears Holdings
Shares of Sears Holdings (NASDAQ: SHLD) popped last Thursday after Memento S.A., a Swiss family office, announced that it owns nearly 2 million shares of the company and recommended that Sears Holdings either go private or take other measures to crack down on short-selling.
Some traders are engaged in illegal "naked shorting" of the stock -- selling it short without first borrowing the underlying shares -- according to Memento (other experts dispute this assertion). The family office further stated, "We believe Sears has the potential for strong financial performance once it addresses a few critical concerns including, among others, the high volume of short-selling activity in its shares."
It didn't take long for Sears Holdings stock to surrender virtually all of its gains from last Thursday. Indeed, while short-selling has contributed to Sears stock's downward trajectory, the main reason for its dreadful performance is that Sears Holdings is a failing company.
Source: Fool.com