Is it possible to short a stock and then buy the company for very low price?

Question

I started investing in some years ago  and I have a special
skill in picking stocks which are fraudulent  and will quickly drop a lot.  Some examples were:

CLDR which dropped from $10 to $5 overnight
LAKE 
AIMT which dropped hard after FDA approval
INPX down 60-80% after reverse split news

What insurance or safety do investors have against rapid price movement, bear raids, or heavy shorting? Considering AIMT dropped from 36-38 to 20, beginning long  before the Corona virus outbreak.

More precisely is there any safety or insurance for investors when this scenario is happening?

Company A has a market cap of X with a stock price of Y
Company B wants to buy out company A
Company B starts to manipulate and spread false news about company A
Company B collaborates with investment banks and hedge funds to bring the valuation down,
Company A drops 1/2 to 2/3 of its original price Y
Company B makes a generous offer and buys company A at this depressed price, perhaps at 1/2 the original valuation

While price is dropping, there is only good news about company A. In some cases, a company B board member could have insider information, timing the buyout before good news is released to the public (for example, a pending drug approval).

Investors were right:

They invested their money in a good company
Good news was released along the way (FDA approval, good sales numbers, new product pipeline, buyout news, more investments from companies)
Any yet  in the end they lost 50% of their investment

Something similar can happen with AIMT (A company) and Nestle (B company). AIMT is dropping price rapidly after a lot of risks went out from the picture.

Based on this video:

https://www.youtube.com/watch?v=gMShFx5rThI

I believe that in the short or mid term that stock price can be easily manipulated with fake news and naked shorting. The SEC is unable to do anything about it (I have seen this in multiple cases).

I have come to believe that investing in small  companies and not indexes for the long term is just gambling because price can be easily manipulated as explained above.  CEOs and CFOs can lie without much  consequence.  They can use buzzwords which can generate high interest in the stock (pump and dump with secondary offering e.g. Corona virus stocks or INPX).  However, I don't think that
this is true for companies with huge market caps because it's harder to manipulate them.

Thank you very much for any insights or ideas that you have!

S Spring · Answer

Short positions don't change the financial fundamentals or the business prospects of a company. Large short positions can only successfully respond to serious problems.

A company with large investments in another company must disclose the investments and often needs government approval. If the approval happens quickly then it's probably just acknowledgement of the receiving a notice filing.

I can't find the reason for a large short position in AIMT except that the launch of the new product shows the current market demand versus the previous potential market demand. However, Nestle is very interested in something and it may be the future development. The recent drop in stock price continued as if in response to, or in spite of, the Nestle investment.

I would take the new funding of the development-stage company to be good news because the company does have future prospects in addition to the current product. The newly issued shares don't trade in the float and the company directly receives the funds from the newly issued shares.

Oh, concerning AIMT, the FDA is requiring that prescribing doctors participate in a "Risk Evaluation and Mitigation Strategy" and that's something like a conditional approval. But Nestle doesn't seem to be concerned about the situation.

Is it possible to short a stock and then buy the company for very low price?

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