Jeffrey,
There certainly is an "association" between high short positions in a biotech and bearish articles in Barons, the WSJ (particularly the regional editions, for some reason) and TheStreet. In particular, I recall articles on AGPH (Barons), SEPR (WSJ and TheStreet), and GELX and PGNS (WSJ). The articles are generally superficial and accepting of the shorts' viewpoint.
Now in general, I do not view a high short position as favorable for a stock, despite the fact that the shorts will have to buy back at some point. Shorts are generally better informed than the average investor, and statistically stocks with high short positions do worse. Further, it is easier in biotech to spread fear and doubt about a stock than in most other industries, and a high short position will have the result of amplifying any potentially bad news.
On the other hand, in biotech, the shorts have generally been singularly misinformed in the long run. They must have lost a bundle in AGPH, SEPR and even, to a lesser extent, in another of their favorites CNTO. (CNTO was actually the biggest short holding at one point in the Prudent Bear mutual fund). The shorts have also been hurt recently in some of the murkier biotech stories like ZONA and HEPH.
The shorts were right on some stocks (like ORG), and they seem to have over-generalized into attacking any biotech with a recently approved (or about-to-be approved) product, like currently CEPH, GELX, PGNS and SCIO.
Peter |
