NEW YORK -(Dow Jones)- Applied Magnetics Corp. shares rallied 22%
Tuesday, benefiting from the overall strength of the disk-drive sector
and what may be a resulting short squeeze.
The NYSE-listed shares (APM) closed Tuesday at $12.375, up $2.06, or
20%, on volume of two million shares, more than three times the daily
average.
Jeff Matthews, of investment firm Ram Partners, said the activity in
Applied Magnetics shares may be in part the result of some
short-covering. As of March 15, short interest in the stock totaled 10.3
million shares.
In selling securities short, investors borrow stock and sell it,
betting that the price will fall and that they will be able to
repurchase the shares later at a lower price for repayment to the
lender. Short interest is the number of shares that haven't been bought
for return to lenders.
The disk-drive group as a whole is showing surprising resiliency,
given the bleak fourth-quarter earnings outlook from Quantum Corp.
(QNTM) late Monday. Matthews said investors may be chasing the battered
sector in the belief that the worst is over.
Officials at Applied Magnetics, a Goleta, Calif., disk-drive parts
concern, weren't available to comment. |
