Short Interest Rises 4.3%
April 25, 2001
Money & Investing
Short Interest Rises 4.3%
On the Nasdaq Market
By CASSELL BRYAN-LOW
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- As the technology-heavy Nasdaq Composite Index slumped below 1650 before rebounding toward the 2000 mark, short sellers increased their bets on further declines.
The level of short sales not yet closed out, known as short interest, rose 4.3% to 3,762,907,958 shares on April 9, up from 3,608,599,871 shares in mid-March. The figures include Nasdaq small-capitalization and large-capitalization stocks and reflect transactions through April 12, allowing extra days to complete settlement.
See complete short interest figures from the Nasdaq Stock Market.
On the Nasdaq SmallCap Market, which is made up of the 747 smaller-cap stocks with a capitalization of at least $35 million, the number of short sales outstanding fell 8.1%. It was up 4.4% for the 3,698 larger-cap stocks on the Nasdaq National Market, which generally have a capitalization of more than $50 million. Investors are betting larger-cap stocks have a better chance of declining than smaller-caps. Short interest often is 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. Aside from making negative bets, investors may rely on short selling for other purposes, such 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 fell to 1.78 days from 1.84 days during the previous month. The short-interest ratio for the smaller stocks declined to 1.89 days from 2.01 days. 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: Ariba Inc. fell 17,025,145 shares to 15,550,864 shares; Maxtor Corp. fell 11,812,123 shares to 6,673,973 shares; Fifth Third Bancorp fell 6,991,871 shares to 7,031,718 shares; Winstar Communications Inc. fell 5,210,213 shares to 18,401,528 shares; and Regions Financial Corp. fell 5,201,094 shares to 7,667,820 shares.
The following companies had the largest volume increases in short sales outstanding: Cisco Systems Inc. rose 28,004,387 shares to 92,193,370 shares; Dell Computer Corp. rose 26,506,176 shares to 58,717,539 shares; Siebel Systems Inc. rose 12,737,352 shares to 26,201,325 shares; Ciena Corp., rose 10,340,609 shares to 21,709,053 shares; and Applied Materials Inc. rose 9,669,634 shares to 37,591,140 shares.
The next Nasdaq short-selling report will be published in The Wall Street Journal on May 25.
Write to Cassell Bryan-Low at cassell.bryan-low@wsj.com
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