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NYSE short interest rises to record level in July
NEW YORK, July 19 (Reuters) -- Short interest on the New York Stock Exchange, the world's largest equity market, rose to a record 5.78 billion shares in the month ended July 13, the Big Board said on Thursday.
This was an increase of 203.7 million shares from the 5.58 billion shares sold short in the period ended June 15, and represented 1.7 percent of the total shares traded on the exchange, the NYSE said. The July 13 month reflects transactions through July 10.
Short sellers opened positions of 100,000 or more shares for companies including Certegy Inc. (NYSE:CEY - news), Citizens Communications Co. (NYSE:CZN - news), FMC Technologies Inc. (NYSE:FTI - news), Kraft Foods Inc. (NYSE:KFT - news), Phoenix Cos. (NYSE:PNX - news), ProAssurance Corp. (NYSE:PRA - news), Sovereign Bancorp Inc. (NYSE:SOV - news), Stillwater Mining Co. (NYSE:SWC - news), and Asia Global Crossing (NYSE:AX - news).
The ten biggest short positions held for the July month were for the following companies: AOL Time Warner Inc. (NYSE:AOL - news), Global Crossing Ltd (NYSE:GX - news), Sprint Corp. (NYSE:FON - news), Rite Aid Corp. (NYSE:RAD - news), Cendant Corp. (NYSE:CD - news), AT&T Corp. (NYSE:T - news), Motorola Inc. (NYSE:MOT - news), Citigroup Inc. (NYSE:C - news), Walt Disney Co. (NYSE:DIS - news), and Johnson & Johnson Inc. (NYSE:JNJ - news).
The big short position in AOL for the July month preceded a drop of 15 percent in shares of the Internet and media giant, measured from the close of trading on July 10. AOL on Wednesday reported revenue growth that disappointed Wall Street expectations.
Short selling is when investors sell borrowed shares with the hope of buying back the stock at a lower price, returning the stock and profiting from the difference. If stocks start to rally, short sellers are often forced to buy back into the market to reduce losses, propelling prices even higher.
A drop in short interest may indicate some investors anticipate a rally, while a rise may show some investors expect a decline in stocks.
Short interest is a less reliable indicator of market sentiment than it has been in the past, said A.C. Moore, chief investment strategist at Dunvegan Associates, which has $500 million in assets under management.
``Short sales have gotten far more complex over the last 10 years for many reasons (such as) hedging and derivative investments and risk arbitrage as opposed to simply the decision that a stock is too high and is going to go down,'' Moore said.
The following is a table of the ten biggest short positions held for the month ended July 13, ranked in descending order:
COMPANY SHORT POSITION
(in millions)
AOL Time Warner 88.7
Global Crossing 86.1
Sprint 80.2
Rite Aid 67.8
Cendant 62.4
AT&T 61.8
Motorola 61.3
Citigroup 57.4
Walt Disney 54.3
Johnson & Johnson 50.1 |
