Reversal of FortuNet

Shares of FortuNet(FNET) have been on a tear over the past week as investors bet that regulators are moving faster toward approval of the company's mobile gambling devices for casinos.

The company, a small-cap gaming-machine maker that went public earlier this year, won approval last week from Nevada's Gaming Control Board for an administrative license to operate the handheld gadget. Next week, the state's gaming commission is expected to grant final administrative approval for the company to become an operator of the devices.

Since last week's initial approval, the stock has more than doubled to around $16.

The shares have been on a rollercoaster ride since FortuNet's initial public offering in January. The company's IPO priced at $9, and shares soared to a high of $25.95 in May. But in late August, the stock sank below $7 as the market feared that Nevada regulators were moving slower than expected toward approving FortuNet's laptop computer-like gaming device.

FortuNet's recent jump could be a classic case of a short squeeze. In August, 20% of the stock's float was held short, representing eight days to cover.

Nevada legislators approved the use of mobile gaming in casinos in the summer of 2005, and the state's gaming commission adopted the final regulations earlier this year.