PRAA: Heavy short manipulation? Or is the joke on me?
PRAA is the biggest holding in my portfolio. So when it drops almost 15% in a week off of no direct news, I get jittery.
The debt collector posted its earnings back in October, so a large move this past week was highly unexpected. There's a few things that makes me think this is just a wild short manipulation: 1) AACC, its closest competitor trading on the exchange, has been gaining, meaning that the sell pressure is directed at PRAA only, and not the debt collection world in general. 2) Cramdown legislation, which is one of the largest risks against PRAA, was recently bisch-slapped: http://thehill.com/homenews/senate/72197-cramdown-legislation-could-be-a-losing-battle-backers-say. This legislation, which would've allowed bankruptcy judges to rewrite mortgages, was feared to open the floodgates for bankruptcy, which would've made it much harder for debt collectors to shake people down. 3) NO NEGATIVE NEWS! 4) While PRAA plummeted, the broader indices stayed even. 5) PRAA is already one of the most heavily shorted stocks on the market. 6) PRAA is trading below historical P/E.
Maybe it's wishful thinking, but I suspect a short squeeze will be coming soon...