interactive.wsj.com
June 22, 2001
NYSE Short Selling
Hits Record Again
By CASSELL BRYAN-LOW
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- Short-selling activity on the Big Board hit a record for the
fourth consecutive month, signaling that investors placed bets that last
month's stock market gains would be short-lived.
Statistics released Thursday showed that short
interest on the New York Stock Exchange, or
short-selling positions that aren't yet closed
out, rose 1.2% to 5,577,217,366 shares in the
month through June 15, from 5,512,609,817
shares on May 15.
On the American Stock Exchange, owned by the National Association of
Securities Dealers, the short-interest figure fell 0.98% to 291,095,414
shares from an adjusted 293,964,951 shares in mid-May. The most recent
figures for the NYSE and Amex reflect transactions through June 12,
allowing extra days to complete settlement.
The stock market climbed through
most of May, peaking late in the
month before giving back most of
those gains and continuing its decline
in recent weeks. For the month of
May, investment returns of
short-only money managers were
down 2.6%, according to an index
compiled by Harry Strunk, an
investment adviser in Palm Beach,
Fla., who surveys professional short
sellers.
Investors who sell securities "short"
borrow stock and sell it, betting that
the stock's price will fall, and that
they will be able to buy the shares
back later at a lower price for return to the lender.
Short interest often is considered an indication of the level of skepticism in
the market. Short interest reflects the number of shares that have yet to be
repurchased to give back to lenders. In general, the higher the short
interest, the more people are expecting a downturn.
Some investors will allocate part of their portfolio to a professional short
seller to hedge, or protect, their assets in case the market falls. Investors
also may rely on short selling for other purposes, including a hedging
strategy related to corporate mergers and acquisitions, hedging convertible
securities and options, or tax-related reasons.
The next NYSE short-sales-outstanding report will be published in The
Wall Street Journal on July 20.
Write to Cassell Bryan-Low at cassell.bryan-low@wsj.com
KJC |
