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March 06, 2005

February short interest

Short interest in Nasdaq stocks rose by 6.3% month over month in February. But short interest for Nasdaq Internet stocks rose by more: on a basket of 25 Internet stocks tracked by American Technology Research, short interest  rose by 10.4%. Details:

Internet stocks with the largest change in short interest (versus January):

  1. HOMS (+41%)
  2. ELNK (+33%)
  3. LOOK (+32%)
  4. OSTK (31%)
  5. CNET (+29%)
  6. NILE (26%)
  7. TZOO (-26%).

Internet stocks with highest short interest as % of float:

  1. OSTK (48%)
  2. TZOO (45%)
  3. NFLX (42%)
  4. PCLN (39%).

American Technology Research analyst Mark Mahaney wrote to clients:

The large-cap Internet stocks remain among the most heavily shorted stocks on NASDAQ. Ranked in terms of total shares short, YHOO ranks #5, IACI #11, AMZN #19, and EBAY #31...

The positions that strike us as the most interesting are: 1) material increase in overall short interest, both for our basket of 25 Internet stocks and for the NASDAQ as a whole; 2) GOOG -- absolute short interest was up 18% M/M to a record high 13.8MM shares, although much of this increase is likely due to the expiry of the final share lock-up; 3) EBAY -- absolute short interest was down 13% M/M and at its lowest level in over two years; 4) ASKJ -- absolute short interest was up 25% M/M and at its highest level in over two years; and 5) NILE -- absolute short interest was up 26% M/M to a record high 2.5MM shares.

Quick comment: Rising short interest is usually a bullish indicator, as short interest is pent-up buying demand. (Short positions need to be covered - eventually.) Excessive short positions as a percentage of float can also lead to "short squeezes", in which investors are forced to purchase stock they have sold short.

Posted by David Jackson on March 6, 2005 at 07:41 AM in ticker: AMZN, ticker: CNET, ticker: EBAY, ticker: ELNK, ticker: GOOG, ticker: HOMS, ticker: IACI, ticker: LOOK, ticker: NFLX, ticker: NILE, ticker: OSTK, ticker: PCLN, ticker: TZOO, ticker: YHOO | Permalink

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