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Technology Stocks : LinkedIn Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (67)	5/25/2011 3:01:01 PM
From: Glenn Petersen	1 Recommendation Respond to of 272

LinkedIn One of Most Costly Stocks to Short By BRENDAN CONWAY Wall Street Journal MAY 25, 2011, 1:58 P.M. ET NEW YORK—LinkedIn Corp.'s stock is one of the U.S. market's most talked-about "shorts," and one of the most costly. Brokers borrowed 1.17 million shares in the newly listed Internet stock Tuesday, or about 15% of the entire float, data from SunGard's Astec Analytics unit show. That shows a healthy appetite for LinkedIn negativity. "If short interest as a percent of float is in the double digits, many investors consider that to be significant," said Andrew Shinn, director of research for SunGard's Astec Analytics unit. "For LinkedIn, it's immediately a stock with a lot of short interest." The data are the market's first glimpse into investors' desire to go bearish on LinkedIn's stock, which posted a first-day surge of 109%. Analysts had predicted a substantial effort to short the stock, given the vigorous debate over LinkedIn's valuation and the memories of the heady Internet bubble of the late 1990s, evoked by last week's initial public offering. Shares rose 1.8% to $97.16 in recent trading Wednesday. Investors who want to short shares borrow the stock and then sell it, betting that the price of the shares will fall and that they can buy them back at a lower price, for return to the lender. In order to borrow the shares, the investors have to pay the owner a fee, normally an annualized percentage of the stock's value. The small float of LinkedIn's stock had many market analysts predicting it would be difficult and costly to sell the stock short. The princely lending rates this week bear that prediction out. The average wholesale rate to borrow LinkedIn was 86% Tuesday, Astec's data show. This means that hedge funds seeking to sell the stock short may have had to pay as much as 181% on an annualized basis to borrow shares, according to the company's estimates. LinkedIn is the fourth-most expensive stock in the U.S. to borrow at present, the same data show. Unlike similarly priced shorts, there's still more LinkedIn shares to go around. LinkedIn borrowers have tapped only about 22% of available shares, Astec's data show. Very high rates usually correspond with a scarcity of stock to borrow, with utilization rates like 90% to 100%. The high cost versus a relatively ample supply was read as a sign that shareholders were capitalizing on the publicity and strong interest in bearish LinkedIn positions. "It seems like the securities lenders were saying, 'Let's charge the maximum amount we can for this, since it's in the news and it's such a popular short,'" Mr. Shinn said. LinkedIn is the only well-known name among the costliest U.S. shorts. The three pricier, as of Tuesday morning, were over-the-counter shares in Kunekt Corp., as well as China Shen Zhou Mining & Resources Inc. and Dearborn Bancorp Inc., according to Astec's data. Write to Brendan Conway at brendan.conway@dowjones.com online.wsj.com

To: Kirk © who wrote (67)	5/26/2011 4:27:05 PM
From: Glenn Petersen	1 Recommendation Respond to of 272

LinkedIn Shares Drop 9% As Option Traders Lick Lips By Mark Gongloff Wall Street Journal May 26, 2011, 2:19 PM ET Well, that kicked up a notch. LinkedIn shares, which earlier were higher at nearly $95, turned down around midday and are now off nearly 4% at less than $91. Update: After taking a breather around 2:30, they really fell in the last hour of trading and ended down nearly 9% at $85.85. Before the selloff, it had been a little surprising to see how well the stock had held up despite lots of talk about how badly people wanted to short it. Options start trading tomorrow, which could make matters worse for the stock, warns Jon Najarian. Reuters reports: “There will be a lot of put activity with speculators buying these contracts on the view that the IPO price was overblown,” said Patrick Mortimer, director of options trading at stock and options block execution firm Pipeline Trading Systems. Mark Sebastian, chief operating officer at OptionPit.com, an option education firm in Chicago, said the difficulty in borrowing shares could result in “huge amounts of conversion trading during the first few days of option activity.” Conversion strategies allow investors to create a ”synthetic” short position against a real long position. An investor would buy the underlying stock and offset this by buying a put and selling a call with the same maturity and strike price. The trader is then able to sell the real long position in the open market. Not everyone sees a massive interest in put options. “I don’t think that investors will necessarily be purchasing puts,” said Joe Kinahan, TD Ameritrade chief derivatives strategist. “If the stock is hard to borrow, that will be priced in already because every time a market maker has to buy calls or sell puts he is going to sell stock as a hedge.” Buying options could be expensive, too, given the robust interest in shorting this puppy. Still, is the sound of the angry mob banging on the door starting to jar LinkedIn investors? blogs.wsj.com