Short Selling Falls

Friday, February 23, 2007 | 06:36 AM

Yesterday's conversation about Margin leads us to today's headline:  Bears' Bets Fall on the NYSE.

"Short-selling activity fell on the New York Stock Exchange for the latest monthly reporting period, as bearish investors continued to struggle.

For the monthly period ending Feb. 15, the number of short-selling positions not yet closed out at NYSE -- so-called short interest -- declined 0.9% to 9,595,242,421 shares from 9,680,953,526 shares in mid-January.

Market-wide, the short ratio, or number of days' average trading volume represented by the outstanding short positions at the exchange, fell to 6.2 from 6.8."

I don't know much of Treflie Capital Management, but apparently they are a consulting firm which tracks short interest. They reported the "the average short-selling portfolio fell 1.8% in January, a dreary follow-up to a decline of more than 5% for all of 2006."

To be filed under No $#*t Sherlock: "Harry Strunk, a partner at Treflie, said short sellers have had an especially difficult time since the summer, when the stock market began a steady run higher that included fresh records in the Dow Jones Industrial Average."

Really? Do ya think?


This post belatedly adds a new category, Short Selling. (How on earth did I ever miss that one?)


Bears' Bets Fall on the NYSE
February 23, 2007; Page C7

Friday, February 23, 2007 | 06:36 AM | Permalink | Comments (9) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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If Google were to lose 1/3 of its market cap, that loss would be greater that the entire value of Amazon at its peak of $113 at the end of the last boom market. There's a saying that includes the search terms 'wool' and 'eyes.'

Amazon at Peak Price 113
Shares Outstanding 414,000,000
Market Cap 46,782,000,000

Google at Current Price 462
Shares Outstanding 306,160,000
Market Cap 141,445,920,000

Drop in Google of 1/3
Loss of Market Cap 47,143,925,136
This is greater than all of Amazon at its peak. We're getting better all the time.

If Google were to discover its next big thing (the promise of which is what the market says justifies its current valuation), and all of Google's metrics were to double right away, Google would then have a market cap of 7.5 times sales. That's a large improvement over the current multiple of almost 15 times sales. Any word on that next big thing, yet?

With a short ratio of one day, IF someone recognizes that Gubyuby is not going to dominate the world, and the overall market goes into a correction, and that is then accentuated by a geo-political calamity, Goog is going to rocket down.

The average guy on the street is going to learn the nuances of how a stop loss really works. The trigger of a sell order does not guarantee the stop price.

Posted by: Rick Hanley | Feb 23, 2007 10:44:04 AM

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