Short Interest in the Brokerage Stocks

[ASusilovic]

The release of NYSE short interest figures for the end of November showed that short positions increased by 3.08% from the middle of the month and are now only 1.4% below their record high reached in July.

One group where short sellers have been focusing much of their attention is the brokers. Below we highlight the changes in short interest since mid-November for the five largest NYSE listed brokerage stocks. As the table highlights, investors seemed to treat each company on a case by case basis. Bear Stearns (BSC), the most heavily shorted brokerage stock, saw negative bets on its stock decline from 19.2% to 18.0% of its float. Merrill Lynch (MER) and Morgan Stanley (MS) both saw short bets against their stocks increase.

The high level of short interest against BSC is interesting because just this morning we saw that Joseph Lewis increased his stake in the company from 7% to 8%. So while investors seem extremely negative on the stock, at least one investor sees value.

http://bespokeinvest.typepad.com/bespoke/2007/12/short-interest.html

Maybe it´s time again to start my very special Bear Stearns buying program....

http://www.elitetrader.com/vb/showt...00782&highlight=My+very+personal+Bear+Stearns

 

[HoundDogOne]

You are implying...
That a large or growing short position in a stock...
Has some correlation (negative or positive) with future price movements.

If this were true...
Then 10 year olds...
Or even your typical ET poster...
Could make easy money in the markets.

 

[ASusilovic]

Quote from HoundDogOne:

You are implying...
That a large or growing short position in a stock...
Has some correlation (negative or positive) with future price movements.

If this were true...
Then 10 year olds...
Or even your typical ET poster...
Could make easy money in the markets.

You´re right HoundDogOne...too simple to be of value...what other indicators do you prefer to identify over-shorted or shall I say "mispriced" stocks ?...

 

[tradestrong]

Quote from ASusilovic:

The release of NYSE short interest figures for the end of November showed that short positions increased by 3.08% from the middle of the month and are now only 1.4% below their record high reached in July.

One group where short sellers have been focusing much of their attention is the brokers. Below we highlight the changes in short interest since mid-November for the five largest NYSE listed brokerage stocks. As the table highlights, investors seemed to treat each company on a case by case basis. Bear Stearns (BSC), the most heavily shorted brokerage stock, saw negative bets on its stock decline from 19.2% to 18.0% of its float. Merrill Lynch (MER) and Morgan Stanley (MS) both saw short bets against their stocks increase.

The high level of short interest against BSC is interesting because just this morning we saw that Joseph Lewis increased his stake in the company from 7% to 8%. So while investors seem extremely negative on the stock, at least one investor sees value.

http://bespokeinvest.typepad.com/bespoke/2007/12/short-interest.html

Maybe it´s time again to start my very special Bear Stearns buying program....

http://www.elitetrader.com/vb/showt...00782&highlight=My+very+personal+Bear+Stearns

That's very interesting because BSC has shown up on my radar as well and I planned on dipping into it tomorrow.

 

[nazzdack]

Suss----you may want to wait for some type of selling-climax accompanied by a volume spike to confirm some type of shorter-term bottom in those stocks before re-starting your program. Same with GS too! See ya down there with the other "catfish".

 

[HoundDogOne]

Quote from ASusilovic:

You´re right HoundDogOne...too simple to be of value...what other indicators do you prefer to identify over-shorted or shall I say "mispriced" stocks ?...

Generally...
One would focus on a well defined universe...
Such as the one you chose... brokerage stocks...
And narrow it down to brokerage/financial stocks with significant sub-prime exposure...
Then apply quantitative analysis to identify...
BOTH ** RELATIVELY ** under and overpriced stocks...
Relative meaning within the universe...
And then pair up long/short "market neutral" pairs...
And do a LOT of scalping along the way.

The main problem is...
Purely quantitative approaches are always sub-optimal...
So the the quantitative analysis is only a "framework"...
With all decision making done by an expert trader within this "framework".

Quant analysis tends to break down at the worst possible times.

So the "expert" part in "expert trader"...
Generally means knowing from experience how to avoid losses in unusual situations...
Because anyone can scalp a quiet, trending market.