Short Interest on Nasdaq Increases 5.2% to Record
By DANIELLE SESSA
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- The stock bears placed a record number of bets last month that share prices on the Nasdaq Stock Market can't sustain their lofty heights.
See complete short interest figures from the Nasdaq Stock Market.
The level of short sales outstanding on the technology-laden stock market rose 5.2% to a record in the latest month.
The level of short sales not yet closed out, known as short interest, increased to 2,281,748,483 shares on Oct. 15 from 2,169,435,046 shares in mid-September, according to Nasdaq. The figures include Nasdaq small-capitalization and large-capitalization stocks.
Short interest is often considered an indication of the level of skepticism in the market.
On the Nasdaq SmallCap Market, which is made up of the 977 smaller-cap stocks, the number of short sales outstanding slipped by 5.4%. It rose by 5.4% for the 3,783 larger-cap stocks on the Nasdaq National Market.
Traders who sell securities "short" borrow shares and then sell them, betting they can profit by buying the stock back later at lower prices.
Short interest reflects the number of shares that haven't been repurchased for return to lenders. As such, it is often taken as an indicator of the degree of negative sentiment among investors in the stocks. Investors may rely on short selling for other purposes, including 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 eased to 2.22 days from 2.43 in the previous month. The short-interest ratio for the smaller stocks fell to 1.04 days from 1.20 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 decreases in short sales outstanding: Adelphia Communications Corp. Class A fell 4,715,159 shares to 3,010,507 shares; ADC Telecommunications Inc. fell by 3,587,393 shares to 6,517,390 shares; Dell Computer Corp. fell by 3,470,382 shares to 27,837,444 shares; Intel Corp. fell by 3,410,838 shares to 37,586,522 shares; and Charter One Financial Inc. fell by 2,759,145 shares to 946,494 shares.
The following companies had the largest volume increases in short sales outstanding: Cisco Systems Inc. rose by 6,601,169 shares to 41,913,992 shares; Knight/Trimark Group Inc. rose by 6,507,460 shares to 17,004,749 shares; Level 3 Communications Inc. rose by 6,031,181 shares to 10,589,705 shares; Yahoo! Inc. rose by 4,424,564 shares to 12,586,194 shares; and Excite At Home Corp. rose by 4,081,181 shares to 17,379,044 shares.
Among companies with the largest short sales outstanding positions: Amazon.com Inc., rose by 2,042,386 shares to 36,919,383 shares; Microsoft Corp., rose by 3,253,978 shares to 31,735,669 shares; E*Trade Group Inc., rose by 1,227,142 shares to 26,757,152 shares; and Qwest Communications International Inc. rose by 3,077,778 shares to 25,238,901 shares.
The next Nasdaq short-selling report will be published on Nov. 26.
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