AVNR: It was a wild ride for AVNR last week, with volatility and volume dragging shares down early in the week before rebounding to a close of $4.67.
Is the up-volume a sign that the large short position is in the process of being covered?
Possible, but there also a couple of other concerns surrounding the company aside from the short interest.
Although most likely just routine congressional posturing, it's worth taking note that Avanir has been targeted by a few politicians who are questioning the pricingof Avanir's flagship product Nuedexta.
It's unlikely, in my opinion, that Avanir will be pressured into altering its prices, but with health care costs sitting right smack in the middle of the crosshairs in Washington, an up-and-coming company may give in and prefer to sail below the radars while Washington takes on bigger companies and challenges.
Any reduction in the price of Nuedexta would give the shorts the opportunity to add some negative pressure to the AVNR share price, given that the lackluster first quarter sales have already been overblown.
The AVNR spike on high volume will be worth watching, as any positive news could send the shorts scurrying for cover in rapid fashion, but it's wise to entertain the potential setbacks that the company could endure as well.
Disclosure: No position.
