I posted my perspective regarding the Feb short interest number on MacEvolution this morning. It's at macevolution.com
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According to data released by NASDAQ yesterday, AAPL short interest fell from 19.4 million shares in Jan to 12 million shares in Feb, a drop of 7.4 million shares. This is the lowest level in over 1 year. For those who aren't familiar with what "short selling" is, NASDAQ's page has a brief explanation.
nasd.com
This news has both negative and positive implications for AAPL investors. The glass can be seen as half empty or half full. On the down side, investors have been counting on those 19.4 million short shares to fuel a "short squeeze" and help propel the stock to even higher grounds. Now that 7.4 million shares have already been covered, some investors may feel a bit disappointed. Another additional 2-3 million shares may have been covered since the Feb 10th census. It's important to keep in mind that compared with other stocks,12 million shares short (~ 9.3% ) for AAPL is still quite high. For example, the short to long ratio for INTC is only about 2.3%.
On the positive side, it's nice to know that the short sellers are now beginning to run for cover. Considering the fact that these short sellers are generally skeptical Apple naysayers, seeing them reducing their shorted shares by 38% is good news indeed. It implies that even among these skeptics the outlook on AAPL has significantly improved.
Now that this news is out, I think a big chunk of the remaining 10-12 million shorts may want to follow the exodus and will be looking for an opportunities to close their position. I for one would rather not see the stock drop and give them that opportunity. ;-)
This net drop of 7.4 million shares means that at least 7.4 million shares were covered by shorts between Jan 12 and Feb 10. Since AAPL traded at a fairly narrow range during this time we can assume that most of these shares were covered at a price between 17 to 19s. Keep in mind that it does not mean that only 7.4 million shares were covered. The total number of shares covered is actually equal to 7.4 million plus new short positions established during the month. Investors who made new short position on AAPL between 1/12/98 and 2/10/98 has already loss a significant portion of their investment and must be kicking themselves in the booty right now. For example, now that AAPL is trading at $22 5/16, someone who shorted AAPL at $18 has loss about 24% of their investment in the last couple weeks. This will make people think twice before betting against AAPL and shorting the stock.
In short (no pun intended), I see many upsides to this news.
1)Investors' near-term outlook on AAPL has dramatically improved.
2)Shorts sellers have already begun to close their position and more will follow.
3)Now that shorting AAPL looks less appealing, there should be fewer short sellers to get in our way as the stock heads higher.
So...investors can either choose to lament those 7.4 million shares that got away or they can find the wisdom to look at the big picture and see the wealth of positive implications in this news. I for one, prefer the latter. "Think different"
Eric |
