The firm that represents the seller reports the transaction and the firm that represents the buyer reports the transaction.
The presence of a short position increases the total float. If for example there is a float of 10,000,000 shares and there is a short position of 1,000,000 shares then there is an extra 1,000,000 shares in the float which is an increase of 10%. The presence of more stock in the float will cause more volatilty in the price action. Take into account the reported short position and if the company has a naked short postion then the implication on the market for the stock can be unstable at best. The shorts depend upon this instability to help them. If for instance there is negative news and under normal circumstances 5% of the float would be sold off by nervous investors the multiples based on the short position will increase depending upon the size. For example if 5% of that 10,000,000 share float came in during negative news and there was a reported short of 10% and a naked of 5% then instead of 500,000 shares coming into the market place 575,000 shares enter the market, a 15% increase in stock. The shorts then take advantage of the weak market and add to the selling with more shorting and the market makers could have even more stock to try and unload. This is how the the shorts and their cartel break the backs of the company. A company with a 10,000,000 share float can maybe withstand a hit of 500,000 or 5% when bad news come but if all of a sudden the market makers get hit with an extra 15 to 25% more stock the market for the stock will collapse.
I hope this helps you.
Regards,
Dominic |
