Yahoo Finance states that EXPE has now a short ratio of 122%. How is this possible. This is what I call a short squeeze. Hopefully non of you shorted too early.
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Expedia- holy s**t!
- Thread starter heilbronner
- Start date
most people define short ratio as a percentage of average daily volume. More than 100% means that it would take more than one days normal volume of covering to eliminate the short interest. yes, it is an indication that a squeeze is possible.
thanks mondo.
could be many things, among them the short numbers are atleast 2 weeks old.
As well, outside of US you can sell short without a locate (in Canada for example).
Also, insiders engage in a nefarious 'loan for stock' financial engineering which allows them to keep their holdings but cash out. It works out by an IB giving them a very low rate loan, in return for them to sign as collateral their shares. The IB then sells short the shares to protect themselves. Voila! No risk for the insider, but they can legally claim to hold the shares still, and the IB pockets fat fees for 'wealth management'.
As well, outside of US you can sell short without a locate (in Canada for example).
Also, insiders engage in a nefarious 'loan for stock' financial engineering which allows them to keep their holdings but cash out. It works out by an IB giving them a very low rate loan, in return for them to sign as collateral their shares. The IB then sells short the shares to protect themselves. Voila! No risk for the insider, but they can legally claim to hold the shares still, and the IB pockets fat fees for 'wealth management'.
insiders still owe the loan balance to the IB and the IB is hedged. They make out like bandits or they lose a little, and they gain a strong relationship with insiders at the company which helps them get future business with the company.
Quote from MondoTrader:
insiders still owe the loan balance to the IB and the IB is hedged. They make out like bandits or they lose a little, and they gain a strong relationship with insiders at the company which helps them get future business with the company.
If the stock shoots up, IB gets screwed. Unless they cover their position early or hedge with derivatives.
Bottom line, the key here is just simple fees and possible future deals. My bank calls that strategy 'DRAGONs". Cool name.
Other than that, it is the same as shorting any stock.
But then, look at the performance of IBDs the last two years and see how successful they have been. Not much money left to steal.