Well well well. I wrote recently about Ocado (LON:OCDO) . No self-respecting value investor would buy into these shares – which no doubt explains why OCDO is one of the most heavily shorted stocks in the market. It is also shorted by none other than Jim Chanos, and appears as a short candidate on Stockopedia’s Unholy Trinity screen.
An yet, the shorters have been so very wrong so far this year. Shares had increased 61% percent YTD at the time of writing, so there was a lot of momentum behind it.
Although I didn’t say it at the time, I thought OCDO to be a dangerous short idea. The basic problem is this: it has glamour stock appeal, is heavily shorted, but the share price has a lot of momentum. In other words, as long as momentum can be maintained, traders can pile in on the long side, squeeze the shorters, and send share prices higher. Lather. Rinse. Repeat.
Then today happened. According to Motley Fool,
Ocado said the talks may lead to Morrisons paying for “certain… existing and future intellectual property and operating knowledge“.
Ocado added the negotiations did not involve any discussion of Morrisons acquiring either the whole of, or an equity stake in, Ocado.
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So now we know. Just ask Whitney Tilson about the advisability of his Netflix short when it was in its glamour phase.
I hope you do the right thing! 
Where next for Ocado, I wonder?
165p
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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.
Ocado Group plc is a United Kingdom-based holding company. The Company is an online grocery retailer. The principal activity of the Company, along with its subsidiaries, is retailing and distribution of grocery and consumer goods within the United Kingdom. The Company owns Ocado Holdings Limited, which holds the entire interest in Ocado Limited. The principal activity of Ocado Limited includes retailing and distribution of grocery and consumer goods. On February 9, 2010, the Company acquired Ocado Limited. The Company's wholly owned subsidiaries include Ocado Holdings Limited, which is an holding company; Ocado Limited, which is engaged in retail and distribution; Ocado Information Technology Limited, which is engaged in intellectual property, and Ocado Cell in Atlas Insurance PCC Limited, which is an insurance company. Ocado Holdings Limited is a 100%-owned subsidiary of Ocado Group plc. more »
