Kelley Oil Finds Its White Knight

Three years ago, Kelley Oil & Gas (KOGC) was a high-flying stock trading in the 30s--and a favorite target of the short-sellers, who saw it as a badly managed company with dwindling reserves, huge debt, and soaring costs. Oil investor Alan Gaines was one of those who shorted the stock--as it fell to 6 in early 1995. By December that year, Kelley had plunged as low as 1, and the Houston oil-and-gas exploration company came close to filing for bankruptcy. Now, some pros, including Gaines, are bullish. The stock has rebounded to nearly 3. What's going on?

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