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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Vol who wrote (2157)	4/6/1999 2:50:00 PM
From: Q.	Read Replies (1) \| Respond to of 2506

Vol, re. shortability of microcaps, I'm familiar with the problem that you describe. Once upon a time, I applied higher floors to the volume and market cap, in order to be more likely to get a shortable stock. The tradeoff is that the companies that have the most serious liquidity problems are generally those with the smallest market caps. When you are looking for a truly broken stock, one that is not only headed down but might never come back, that's what you need. FWIW, I've found Brown not to be a good broker for shortsellers. You mentioned their margin requirement, which I didn't know. What I did know is that they don't let you short anything less than 1000 shares if the stock is under something like $10. They refuse to sell closed-end funds short, and that is an unusually restrictive policy. To get good borrows on these tiny companies, it pays to have at least 2 brokers. Make sure that they use different clearing firms, though, since that's where the stock borrow comes from.