Short Interest on Nasdaq Drops As Bears Back Off Tech Stocks
By CASSELL BRYAN-LOW
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- Short sellers eased their bearish bets on Nasdaq stocks, as the technology sector gave back gains.
The level of short sales not yet closed out, known as short interest, fell to 3,978,074,188 shares on Feb. 15, down from 4,023,953,114 shares through mid-January. The figures include Nasdaq small-capitalization and large-capitalization stocks and reflect transactions through Feb. 12, allowing extra days to complete settlement.
Traders who sell securities "short" borrow shares and then sell them, betting they can profit by buying the stock back -- or covering those positions -- later at lower prices. Short interest reflects the number of shares that haven't been repurchased for return to lenders.
On the Nasdaq SmallCap Market, which is made up of the 652 smaller-cap stocks with a capitalization of at least $35 million, the number of short sales outstanding rose 5.5%. It fell 1.2% for the 3,361 larger-cap stocks on the Nasdaq National Market, which generally have a capitalization of over $50 million.
Short interest is often considered an indication of the level of skepticism in the market. 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 2.16 days from 2.30 days in the previous month. The short-interest ratio for the smaller stocks was 1.46 days, up from 1.40 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 increases in short sales outstanding: Metromedia Fiber Network Inc. rose 16,595,543 shares to 54,519,598 shares; Applied Materials Inc. rose 7,607,795 shares to 30,115,719 shares; and WorldCom Inc.-MCI Group rose 6,316,976 shares to 11,071,636 shares.
The next Nasdaq short-selling report will be published in The Wall Street Journal March. 27.
Write to Cassell Bryan-Low at cassell.bryan-low@wsj.com
Updated February 28, 2002 |
