Pernix Therapeutics Holdings Inc (NASDAQ: PTX) has long been a victim of what many publicly traded companies fear… the short attack. The reality is that shorts often distort the true value of a company, and in this particular, case, that’s exactly why the stock is trading at far below the value it should be. Unfortunately, PTX has been the victim of several shorts that hope the stock will fall. However, if you’re on the short side of the coin, you may want to think again. You’re likely playing a very dangerous game.
A Reminder To PTX Shorts
As you know, shorting any stock can be incredibly dangerous. After all, if the stock finds a way to start climbing, well, your losses can be massive. However, Pernix Therapeutics Holdings takes this danger to the next level. The reality is that we’re not talking about whether or not PTX will climb, it’s more of a conversation of when! There’s one big reason that I say that…
John Sedor Is No Spring Chicken!
Quite a while ago, John Sedor took over as the CEO of PTX, a company that at that time was in some serious trouble. The financial picture wasn’t a good one, the sales process lacked direction, and well, Pernix Therapeutics was seemingly falling apart. However, Sedor would soon change all of that, and that’s no surprise. Sedor is a well known expert in the biotech industry that has a history of turning companies around, pushing to gains, and ultimately, selling the company. Well, that’s what we’re seeing…
- The Turn Around – About a year ago, John Sedor released his plans for company restructuring. He noticed several redundancies in the sales process, which allowed him to restructure this process, leading to higher efficiency for PTX. Of course, higher efficiency means lower cost.
- Work Continues On Restructuring Debt – When Donald Trump made it to the White House, he continuously reminded the world that he inherited a mess. Well, Sedor found himself in the same shoes. From a financial standpoint, Sedor was handed a hoarder’s house and asked to clean it, which he has done a great job of so far.
- The Sale – Finally, John Sedor ultimately plans to sell PTX, and these plans are likely to turn into a reality. After all, his track record shows that he has been overwhelmingly successful with regard to walking into crippled companies, preparing them for sale, and ultimately, demanding a strong premium! There’s no reason he can’t do that with Pernix Therapeutics Holdings. There’s also no doubt that this is his plan. In fact, in an outline about future capital requirements, Sedor made it clear that these requirements are dependent on “the extent to which we are able to sell all or a portion of the Company and the prices at which we are able to effect any such sales.”
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The Bottom Line
The bottom line here is that it’s usually not a good idea to second guess yourself. However, if you’re shorting PTX, this is one of those rare times when it is. If you’re into shorting stocks, you know the danger involved. Well, with PTX, that danger is exacerbated by the fact that a sale is lingering. In order to lose massive amounts of money as a short, all you need to do is short a stock that is destined for gains. In other words, all you need to do is short PTX!
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