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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: DLS who wrote (12859)	8/7/1998 11:11:00 PM
From: zax	Read Replies (2) \| Respond to of 164687

An excellent analysis, DLS.

To: DLS who wrote (12859)	8/8/1998 11:09:00 AM
From: Bilow	Read Replies (2) \| Respond to of 164687

Hi DLS; About borrowing shares of AMZN to short: In the daytrading office I trade at, the guys only borrow shares if the stock is in play. The stock is in play if the volume is up, and (typically) the stock price is moving quickly around. If we borrow the shares (for intraday shorts) then no one else can borrow those shares that day. It is well known that AMZN trades a tremendous number of shares per day, compared to its float. This is clearly due to the large number of daytraders trading it back and forth. A lot of the time the inside quotes on AMZN are provided by "market makers" that are clearly daytraders. (For instance, ISLD or ATTN.) I think one of the effects of daytraders is to increase the amount of time when the stock is in "fast market conditions". (God, I hope I got that definition correct. :) On the other hand, most of the time the stock is not ripping up or down, and at those times the daytraders will tend to reduce the spread. Overall, I think the typical market participant will end up with better fills on days the daytraders are participating. My guess is that the daytraders exert a significant influence on the number of shares available. A daytrader who cannot go short is crippled when trying to trade a stock. Consequently, they have to be able to borrow shares, and those borrowed shares aren't available to the general public to short. My guess is that daytrader activity (which occurs on big volume days) causes borrowing of large numbers of AMZN shares. If this effect is significant, then the effect would be that AMZN shares are typically hard to borrow when volume is up, and easier to borrow when volume is low. I think this is likely to be the cause of the effect you are seeing. By the way, if the short position is 97% of the float, then I calculate that the ratio of longs to shorts will be 1.97 to 0.97, or a little larger than 2 to 1. -- Carl