Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Globalstar Memorial Day Massacre -- Ignore unavailable to you. Want to Upgrade?

To: Mama Bear who wrote (174)	5/13/2000 12:07:00 PM
From: Valueman	Respond to of 543

Maybe you guys are having some effect already. There was a 600K share forced buy-in on GSTRF at one of the major brokerages on Friday.

To: Mama Bear who wrote (174)	5/13/2000 1:15:00 PM
From: The Duke of URL©	Read Replies (1) \| Respond to of 543

<. Shareholder #3 decides to remove his shares from the pool of available shares. This will not effect either of the shortsellers, as there are still 5000 (7000 - 2000) shares in the pool available for short selling.> But if there was no water left in the "pool", ie the shorting were so extensive that all shares available for shorting had been borrowed, THEN there would be a share for share reduction. AND, I don't want to seem grassy knolling here but there is "urban legend" (and, I believe, at least one SEC case?) to the effect that there are some offshore brokerages that are not 'real strict' about the 3/10 day rule. If this were the case, then isn't it theorectly possible to have more shares outstanding than the float. AND, if there were more than one transfer agent, how would any one transfer agent really know the total. Oh........, Mama........, could this really be the end........., to be stuck here inside of Mobile with the Memphis Blues again. If ya catch my drift.

To: Mama Bear who wrote (174)	5/13/2000 1:52:00 PM
From: A.L. Reagan	Read Replies (1) \| Respond to of 543

Barb - thanks for taking the time for the shorting tutorial. Many investors who mostly play on the long side (myself included) do not know the nits and grits of regulations on shorting. So, it sounds like Depository Transfer Corp. and the other clearinghouses coordinate the borrow to make sure the aggregate short interest can't exceed the number of shares available on the borrow. That sounds pretty responsible so there can't be a multiplier effect (train wreck) from a small contraction of the number of shares available on the borrow. And the creation of additional float is limited to 1:1. In your example of 10,000 shares outstanding, 8,000 shares available to be shorted, then the maximum "float" could be 18,000 shares - not some theoretically unlimited number. So, from your example, if 7,200 of the 8,000 shares available for shorting were lent out, and then all of a sudden 2,000 became unavailable, the deficit has to be made up by holders of at least 1,200 shares by repurchasing in the open market. A few questions: 1. Who besides DTC keeps track of all this stuff? 2. Do brokerage firms have a more or less real time fix (from DTC and other clearinghouses) on the number of shares available to be borrowed? 3. If the answer to #2 is yes, of course they do, can this information be disclosed by the brokerage to an individual investor? 4. Is there any reason why changing shares from a margin to a cash account would not reduce the pool of available to borrow? 5. Do you have any insight into the urban myth that placing a GTC limit sell order on shares held in a margin account reduces in any way the borrow pool? TIA for suffering some of the ignorance expressed on this thread (mine definitely included). We are here on SI to share and learn. Appreciate you taking some time to help at least some of us be a little less clueless. Regardless of the present GSTRF situation, I think a lot of investors have learned recently that balancing a portfolio with a few shorts is a smart thing to do. Speaking for myself, I've always been a little nervous shorting without my eyes open in fears of getting Rambusized; but I would not hesitate to bet against some fundamentally overpriced stock if I could do enough DD to know I wasn't walkiung into some classic bear trap. Thanks again for your light-shedding.