Treasury stock is stock that has been issued but is being
held by the company (such as shares obtained in a
company repurchase). In effect, as far as the float is
concerned treasury stock is like unissued shares, but
as a corporate asset treasury stock has a cost on the
books and is a corporate asset with a current value.
If you want more than that (or, which is likely,
a correction to that) a better accountant than I will
have to answer.
Technically all stocks issued can be traded, but
shares held by corporate officers are restricted so
they cannot be traded freely on the open market. For
instance, an officer cannot both buy and sell within
a six-month period (there are probably exceptions to
this, but I don't know what they are).
Treasury stock is not hypothecated (held in a street
account by a broker) and can't be loaned for shorting.
I suppose, but don't know, that closely held stock
is the same.
The float can be hypothecated, and here the plot thickens.
Apparently the float can in theory by loaned repeatedly
in at least diminishing fractions for shorting. In
effect, outstanding short interest expands the float.
There's no obvious theoretical limit to this that I've
been able to determine, though I've read that there
is a rule (in a land of few rules apparently) which
forbids loaning more than 50% of a clearing firm's
available stock for shorting. If this were true,
you couldn't theoretically more than double the float
by shorting, but I don't see any way to enforce it
because a clearing house could take in shares which
were in fact bought from a short seller, which would
increase its available shares for shorting.
All very mysterious. If you want to know more,
don't ask me! If you find out more, please tell me!
Regards,
Spots |
