Short Interest on Nasdaq
Rises 2.11% to a Record
By DANIELLE SESSA
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK –
The stock market bears are roaring even louder in 2000. The Nasdaq Stock Market may have gotten off to a shaky start this year, but investors who bet that stock prices are going to fall even further are setting records with their bearish calls.
The level of short sales outstanding on Nasdaq rose 2.11% in the latest month -- its fourth consecutive record. The level of short sales not yet closed out, known as short interest, increased to 2,413,628,695 shares on Jan. 14 from 2,363,795,218 shares in mid-December, 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 932 smaller-cap stocks, the number of short sales outstanding slipped 16%. It rose 1.82% for the 3,775 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 inched up to 1.79 days from 1.77 days in the previous month. The short-interest ratio for the smaller stocks rose to 0.47 days from 0.40 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 decreases in short-sales outstanding: Qualcomm Inc. fell 13,100,442 shares to 28,392,634; Cisco Systems Inc. fell 6,830,351 shares to 38,730,832 shares; Dell Computer Corp. fell 5,898,193 shares to 41,159,694 shares; Sun Microsystems Inc. fell 5,893,008 shares to 18,110,423; and Costco Wholesale Corp. fell 5,876,232 shares to 5,398,610 shares.
The following companies had the largest volume increases in short-sales outstanding: Internet Capital Group Inc. rose 5,735,488 shares to 9,899,557; Informix Corp. rose 4,827,280 shares to 12,535,720 shares; Amazon.com Inc. rose 4,753,314 shares to 31,865,788; Flextronics International Ltd. rose 4,315,898 shares to 10,553,998 shares; and McLeodUSA Inc. rose 3,310,431 shares to 14,166,754 shares.
Among companies with the largest short-sales outstanding positions: Microsoft Corp. fell 4,646,560 shares to 38,248,483; Intel Corp. fell 4,674,540 shares to 32,111,659 shares; Nextel Communications Class A rose 2,579,962 shares to 27,211,762 shares; Global Crossing Ltd. fell 2,415,955 shares to 26,370,891 shares; and E*Trade Group Inc. rose 914,395 shares to 25,746,956 shares.
The next Nasdaq short-selling report will be published on Feb. 28.
Write to Danielle Sessa at danielle.sessa@wsj.com
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