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Short Selling Related News
 in chronological order

 See also: Short Selling Related Books, Short Selling Related Scholarly Papers, or Short Selling Home Page.

Table of Contents:
 

A bag of shorts

April 28, 2006
From The Age:
The biggest stock lending positions in the market right now are in Macquarie Group, Centennial Coal, Iluka, Incitec and James Hardie Industries - which is a fair indication of the stockmarket's biggest shorts.

Stock lending usually, but not always, indicates short-selling activity. The annual RiskMetrics corporate governance conference in Melbourne today heard that Australian super funds were making around $900,000 a day from lending their shares to short sellers and other stock borrowers.

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Short selling shouldn’t be sold short

April 24, 2006
From Financial Standard:
The overreaction against short selling and securities lending need to calm down, said Greenwich Alternative Investments.

“Short selling provides liquidity and allows you to make calls in both directions,” said Ryan Pearson, Greenwich senior vice president on a visit to Australia last week.

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Goldman makes the short list

April 16, 2006
From FORTUNE:
Goldman Sachs recently provided a glimpse of one of the rarest occurrences on Wall Street: an analyst recommended that clients bet against a company by selling its shares short. In this case, the company was struggling Seattle thrift Washington Mutual (WM, Fortune 500), which happens to be a Goldman client.

Goldman's short call last Friday made headlines in part because Goldman had just earned millions of dollars in fees for arranging a costly $7 billion recapitalization of WaMu. Five years ago, Goldman and other major investment banks paid over $1.4 billion to settle charges brought by then New York Attorney General Eliot Spitzer that they tainted their research to curry favor investment banking clients. The settlement has yielded a mixed bag: the most egregious conflicts of interest have waned, but aggressive calls to sell a stock are still uncommon.

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Short-selling shift adds to volatility

April 13, 2006
From The Arizona Republic:
The past nine months have been a gut-wrenching period for stock-market investors.

Since mid-2007, the Dow Jones industrial average has suffered more than 45 daily drops of at least 100 points. A volatility index tracked by the Chicago Board Options Exchange has been running 50 percent to more than 100 percent above where it stood early last year.

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Australian Exchange Seeks New Regulations for Short Selling

March 31, 2006
From The Sydney Morning Herald:
The Australian Stock Exchange Friday proposed short-term measures to regulate covered short selling ahead of a government move to remove legal ambiguity around the practice.

Nick Sherry, the minister for corporate law, said the government was planning changes to the Corporations Act in response to recent market volatility.

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Collapse could reveal a sordid tale of short-selling super

March 29, 2006
From The Sydney Morning Herald:
There's a dirty little secret your superannuation fund manager would like to lock away in the bottom drawer. Unfortunately, the collapse yesterday of Opes Prime Group - a Melbourne stockbroker - will probably bring out the ugly truth.

For the past few years, most big super funds have been adding a few extra dollars to your returns - and their fees - by lending out the stocks they buy.

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What is short-selling?

March 21, 2006
From Telegraph.co.uk:
Short-selling is the practice of selling borrowed shares in the hope of repurchasing them later at a lower price. This is done in an attempt to profit from an expected decline in the price of the shares.

For example, shares in Company X are selling for £1 each. A short-seller would borrow 1,000 shares through a broker and sell them immediately for £1,000, hoping the price falls.

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Short-sellers bullish on market's fall

March 13, 2006
From The Chicago Tribune:
Tuesday's surge in stock prices followed by Wednesday's snore should remind investors that uncertainty still rules on Wall Street.

With house prices continuing to drop, no action by the Federal Reserve, including Tuesday's assist for the beleaguered financial sector, is designed to be or is capable of being a silver bullet that will prompt a sustained rally in stocks.

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Socially responsible shorting

March 13, 2006
From Business Spectator:
Al Gore has further burnished his do-gooder reputation. In the wake of his international campaign to raise awareness about global warming, the vice president-cum-Nobel prizewinner has nearly finished raising a big socially-responsible investment, or SRI, fund.

Like most SRI funds, Gore’s $US5 billion vehicle only takes long positions in stocks that meet its environmental and social justice criteria. That may sound more righteous than shorting stocks – a practice associated in the public’s mind with moustache-twirling financial villains. But SRI funds with the courage of their convictions should consider betting against the irresponsible, too. It might even help their returns.

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Who's on the short list?

March 10, 2006
From Business Spectator:
One reason there is a lot of securities lending in Australia is that the ASX did not follow the United States Securities and Exchange Commission in removing the 'uptick rule' in 2007.

This rule says any short sale must not take place below the price of the immediately preceding ordinary sale. It was a part of the original US Securities and Exchange Act in 1934 and was designed to prevent the sort of short-selling free-fall that occurred in October 1929.

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Selling short is the new frontier

March 3, 2006
From Financial Times:
Shortly after being installed as chief investment officer at Calpers, the largest US pension fund, two years ago, Russell Read began making discreet enquiries about using short selling to boost the overall size of his equity holdings.

Mr Read was looking in particular at quantitative managers offering so-called 120/20 strategies. These allow an otherwise conventional equity manager to sell short individual stocks worth up to 20 per cent of its portfolio value and invest the proceeds in additional long share purchases.

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Tighter shorts may put the squeeze on those they are supposed to protect

March 3, 2006
From The Australian:
WHO said this? "Short-selling is primarily responsible for the share price fall. There's been unfair rumour fuelled by those who have a vested interest."

And this? "It's a typical short-seller trick. Take a short position, then send someone to ask a question which suggests we're hiding something."

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Short sellers teach ABC a lesson

February 27, 2006
From News.com.au:
A SHELL-SHOCKED Eddy Groves has lashed out at hedge funds, claiming the mass market shorting of his childcare empire yesterday was "sad for Australia", amid a day of wild trading in which shares in his ABC Learning Centres plunged as much as 70 per cent.

"I am just so shocked when you look at the assets this company has," Mr Groves said.

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Short-selling to begin anytime: BSE chief

February 26, 2006
From Business Standard:
The Bombay Stock Exchange (BSE) is all prepared to roll out institutional short-selling and can do so “anytime”, said Managing Director and Chief Executive Officer Rajnikant Patel.

Short-selling for institutions backed by the stock lending and borrowing mechanism was earlier scheduled to commence from February 1.

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The Advantages of Short Selling

February 14, 2006
From Seeking Alpha:
It always amazes me that so many active investors who pick individual stocks, rather than buy funds or get passive market exposure through index funds and ETF's, are unwilling to express their bearish views through short selling. Instead, they sell outright, or buy puts, or hedge with some other passive device to lower their market exposure.

If you have the guts to buy a stock, presumably you've decided that the stock is at least relatively cheaper than its competitors, or stocks in general. Whatever the insight to that decision should be "reverse engineered" allowing stocks to be identified as unattractive, and thus likely to underperform your picks. There has to be an applicable symmetry to your investment process, otherwise you are deluding yourself that you can pick "winners", if you can't pick relative "losers" as well.

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ASX feeling naked flame

February 14, 2006
From The Sydney Morning Herald:
ASX Ltd's chief executive, Robert Elstone, felt the mood first-hand yesterday. The company produced a stellar result, only to have its shares sold.

In the increasingly complex and sophisticated market for financial products, the range of participants play their own games in the aftermath of the release of financial information. It is their positions that increasingly dictate the market value of a stock, rather than the company's profit performance.

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Short Selling Declines at the NYSE

February 7, 2006
From The Wall Street Journal Online:
Short-selling activity fell at the New York Stock Exchange in late January as fears about a U.S. recession were balanced by cheaper stock valuations and forecasts for the economy to rebound in the second half.

For the two-week period ended Jan. 31, the number of short-selling positions not yet closed out on the Big Board -- called short interest -- fell 1% to 13,709,338,101 from 13,850,660,313 in mid-January.

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Heavy Selling Batters Hong Kong

February 6, 2006
From TheStreet.com:
Asian markets fell the furthest in two weeks ahead of the Chinese New Year, prompted by short selling in Hong Kong, which dragged the index 5.4% lower Wednesday.

The Hang Seng was only open for the morning session, but in that time it dropped 1,339 points, to 23,469. The Nikkei followed, plunging 646 points, or 4.7%, to 13,099. China's Shanghai Composite Index held up better, losing 72 points, or 1.6%, to 4599.

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Short Stories: How to profit from the pending plunge

January 22, 2006
From BloggingStocks:
Although short selling -- the practice of selling borrowed shares with the hope of repaying the loan by buying back the shares at a lower price -- goes against the American belief that stocks always go up, I have long been fascinated with it. Short Stories discusses what works, what doesn't, and what some of the leading lights in shorting stocks think about its opportunities and threats. I describe possible short trades and seek your comments and questions for story ideas. I don't offer any investment advice and I don't trade on any of the posts I write.

BusinessWeek reports that the consumer is tapped out. Can you profit from the combination of a falling market and a cash-starved consumer?

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Immediate Short Selling Opportunity in Bonds

January 20, 2006
From Seeking Alpha:
Investors were fleeing the stock market Friday and investing in the 20 to 30 Year US Treasury Bonds, traded by the ETF, iShares Lehman 20+ Year Treas. Bond (TLT).

The Treasuries have not yet conceded to the report that inflation is surging at its worse level in 17 years (Martin Crutsinger of the Associated Press) as investors are perceiving the government bonds to be a 'lifeboat of safety'; but "safe they ain't" as the Treasures are eventually going to concede to continued reports of inflation, as well as concede to the yield curve which is seen steepening.

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Short Interest Declines at Nasdaq

January 11, 2006
From The Wall Street Journal Online:
Short interest fell at the Nasdaq Stock Market in late December amid a modest gain in technology shares.

For the semimonthly period ended Dec. 31, 2007, the number of short-selling positions not yet closed out at Nasdaq -- so-called short interest -- fell 2% to 8,112,753,852 shares from 8,280,539,309 shares for the period ended in mid-December.

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S&P launches 'shorting' index

January 10, 2006
From FinancialNews-US.com:
Ratings agency and data provider Standard and Poor's has launched what is believed to be the first product that tracks in reverse the performance of the S&P 500, potentially offering investors greater possibilities for shorting the US blue-chip index.

The new index will rise as the S&P 500 falls, incorporating information on both prices and dividends, acting as a proxy for a portfolio of short positions in the index. It may act as a spur for asset managers in Europe and Asia to develop investable products run against it.

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