West,
We may just get one:
Nasdaq Short Interest Rises to Record Level
By CASSELL BRYAN-LOW
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- Short interest in Nasdaq stocks rose to a record level for the second month in a row, despite a volatile period for technology shares.
The level of short sales not yet closed out, known as short interest, rose 5% to a record 4,013,408,493 shares on July 13, up from a revised 3,821,032,805 shares mid-June. The figures include Nasdaq small-capitalization and large-capitalization stocks and reflect transactions through July 10, allowing extra days to complete settlement. The previous record was 3,764,094,547 shares in April.
See complete short interest figures from the Nasdaq Stock Market.
There has been no clear direction among technology stocks and short sellers as a result have been wary, said Harry Strunk, an investment adviser in Palm Beach, Fla., who surveys professional short sellers. According to his index, short sellers ended June flat to only slightly up. With the market whipsawing as it has, "if [short sellers] get too overexposed, they get hurt," he said.
On the Nasdaq SmallCap Market, which is made up of the 718 smaller-cap stocks with a capitalization of at least $35 million, the number of short sales outstanding jumped 42%. It was up 4.7% for the 3,575 larger-cap stocks on the Nasdaq National Market, which generally have a capitalization of over $50 million.
Short interest is often considered an indication of the level of skepticism in the 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. Aside from making negative bets, investors may rely on short selling for other purposes, such 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 rose to 2.36 days from 2.19 days in the previous month. The short-interest ratio for the smaller stocks rose to 2.31 days from 1.06 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: WorldCom Group fell 20,096,968 shares to 60,494,623 shares; 360Networks Inc. fell 5,170,074 shares to 8,855,356 shares; Comcast Corp. Special A fell 5,054,070 shares to 32,475,553 shares; Comverse Technology Inc. fell 5,005,243 shares to 4,515,924 shares; and Juniper Networks Inc. fell 4,458,727 shares to 10,620,259 shares.
The following companies had the largest volume increases in short sales outstanding: Exodus Communications Inc. rose 32,112,009 shares to 61,251,914 shares; Level 3 Communications Inc. rose 14,212,291 shares to 56,604,054 shares; Dell Computer Corp. rose 10,651,053 shares to 52,832,061 shares; and XO Communications Inc. Class A rose 9,669,830 shares to 31,229,467 shares.
The next Nasdaq short-selling report will be published in The Wall Street Journal and the online Journal Aug. 27.
Write to Cassell Bryan-Low at cassell.bryan-low@wsj.com
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