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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Jdaasoc who wrote (32375)	10/20/1999 4:27:00 AM
From: Bilow	Respond to of 93625

Hi Jdassoc; Some thoughts on the difficulty getting short RMBS. Some possible explanations... (1) I have seen this happen when a lot of daytraders decide to trade a stock. Daytraders (I mean high volume direct access guys) want to go short as well as long, so they have to borrow the shares at the beginning of the day. Then, during the day, they go long and short as conditions will. The borrowed stock isn't actually sold short into the market for very long, so there is very little bounce built into the stock price. Though if this does cause a short squeeze, the long term shorts will lose their borrowed shares and be bought in. Typically, daytraders will keep asking for shares to borrow for several days after the volatility, as they kind of expect lightening to strike again. This is because borrowing the shares is free to them. The result is that the shares get taken off the lending market, but not actually sold short. A typical consequence of this pattern of behaviour is that it is always hardest to borrow stock which have had a recent increase in volatility. (2) Some big institutions will stop lending out their shares if they want the stock price to be forced higher. If the institution is in it for the long haul, they really don't care as much, but if they are intending on getting out soon, it is convenient to get the stock price up as high as they can. Either or both of these would explain why it is so hard to borrow shares, yet the stock price action looks nothing at all like a classic short squeeze. -- Carl