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December 28, 1999
As Nasdaq Continues to Advance,
Short Interest Also Hits a Record
By TERZAH EWING
Staff Reporter of THE WALL STREET JOURNAL
The Nasdaq Stock Market's technology stocks seem to set records almost
every day, symbolizing unbridled investor confidence in stocks. But for the
past three months, the number of bets that Nasdaq stock prices will come
down to earth have set records as well.
The level of short sales outstanding on Nasdaq rose 2.13% for the latest
month to a third consecutive record.
The level of short sales not yet closed out,
known as short interest, increased to
2,363,795,218 shares on Dec. 15 from
2,314,493,982 in mid-November, according to
Nasdaq. The figures include Nasdaq small-capitalization and
large-capitalization stocks.
On the Nasdaq SmallCap Market, made up of the 916 smaller-cap stocks,
the number of short sales outstanding rose 11%. It rose 2% for the 3,772
larger-cap stocks on the Nasdaq National Market.
Short interest is often considered an indication of the level of skepticism in
the market. Traders who sell securities "short" borrow shares and then sell
them, betting they can profit by buying the stock back later at lower prices.
Short interest reflects the number of shares that haven't been repurchased
for return to lenders. As such, it is often taken as an indicator of the degree
of negative sentiment among investors in the stocks. Investors may rely on
short selling for other purposes, including as a hedging strategy related to
corporate mergers and acquisitions, for convertible securities and options,
and for tax purposes.
The Nasdaq National Market's short-interest ratio dropped to 1.77 days from
2.08 days the previous month. The short-interest ratio for the smaller stocks
fell to 0.40 from 1.03 days from the month earlier. The ratio is the number of
trading days that would be required to close out the short positions through
share purchases and is considered a measure of trading sentiment.
The following companies had the largest volume decreases in short sales
outstanding: MCI WorldCom Inc. fell 7,534,455 shares to 20,775,895; Exodus
Communications Inc. fell 6,173,118 shares to 11,944,826 shares; Qualcomm
Inc. fell 5,189,128 shares to 10,373,269 shares; DoubleClick Inc. fell
4,216,946 shares to 4,572,342 shares; and Dell Computer Corp. fell 3,852,590
shares to 47,057,887 shares.
The following companies had the largest volume increases in short sales
outstanding: Global Crossing Ltd. rose 8,902,424 shares to 28,786,846 shares;
Microsoft Corp. rose 8,433,054 shares to 42,895,043 shares; Chiron Corp.
rose 4,201,708 shares to 11,320,012 shares; Informix Corp. rose 4,190,441
shares to 7,708,440 shares; and Yahoo! Inc. rose 3,999,039 shares to
18,206,323.
Among companies with the largest short sales outstanding positions: Dell
Computer at 47,057,887 shares; Cisco Systems Inc., which fell 5,768 shares
to 45,561,183 shares; Microsoft at 42,895,043 shares; Intel Corp., which fell
55,296 shares to 36,786,199 shares; and Qwest Communications
International Inc., which rose 22,095 shares to 29,479,464.
The next Nasdaq short-selling report will be published on Jan. 27.
Write to Terzah Ewing at terzah.ewing@wsj.com |
