Who says that the market doesn't trade off of inside information?

The short interest in glass and fiber maker Corning (NYSE: GLW) more than doubled in the two weeks ended Oct. 31, to 83 million shares. (Data were released Nov. 11.) The short-interest surge came just days before Apple (Nasdaq: AAPL) said Nov. 5 that it was going to work with GT Advanced Technologies (Nasdaq: GTAT) in the production of touch screens at an Apple manufacturing facility.

To be sure, the deal was a great win for GTAT, as my colleague David Goodboy noted a few days ago.

But GTAT's win shouldn't be seen as a real impediment to Corning. And short sellers, even as they traded on this news early, will still likely get burned -- because Corning is shaping up to be both a deep value play and a growth play.

Merrill Lynch's Wamsi Mohan was one of the first analysts to weigh on the Apple/GTAT linkup: "This announcement does not change our opinion of the current limitations of Sapphire (or of) the price and feature advantage of Gorilla Glass. In our view the applications are likely to be more niche and Gorilla's position in the touch market relatively unchanged." He has a "buy" rating and $22 price target, representing 30% upside.

Mohan's specific concerns: The Sapphire production process is "orders of magnitude more expensive than Gorilla Glass," which would likely add $20 to the cost of each iPhone if it were used in that device. The high cost relates to low manufacturing yields and arduous production techniques, he notes, adding that "Sapphire is heavier than Gorilla and does not perform as well in drop and tumble tests." That's why Mohan expects the AAPL/GTAT linkup will likely serve a small niche product, such as the iWatch.