Financial stock short sellers make some December changes

Posted Dec 24th 2007 11:15AM by Jon Ogg
Filed under: Short Stories, Citigroup Inc. (C), JPMorgan Chase (JPM), Bank of America (BAC), Merrill Lynch (MER), Federal Natl Mtge (FNM), Countrywide Financial (CFC), Wachovia Corp (WB), Wells Fargo (WFC), Lehman Br Holdings (LEH)

While many financial stocks experienced turmoil recently, it appears that NYSE short selling has been mixed and in some key stocks the short sellers drastically trimmed their positions. These changes were from the November 30 reading to the new date of December 14. The raw number of more active financial stocks saw an increase in short selling, as you can see below:

STOCK (Ticker)	DEC 14, 2007	NOV 30, 2007
Countrywide Financial (NYSE: CFC)	139,211,619	131,258,613
Citigroup Inc. (NYSE: C) - (2008 Dogs of the Dow stock)	104,873,159	84,849,090
Wells Fargo (NYSE: WFC)	67,128,867	64,840,618
Wachovia (NYSE: WB)	46,359,867	45,420,765
MBIA Inc (NYSE: MBI)	39,207,847	30,185,705
Lehman Brothers (NYSE: LEH)	37,061,479	34,055,324
JPMorgan Chase (NYSE: JPM)	30,936,347	33,187,514
Ambac Financial (NYSE: ABK)	30,120,143	24,029,144
Merrill Lynch (NYSE: MER)	28,948,649	25,080,570

Interestingly enough, though, there were some major drops in short interest. At the end of November, I had noted how Rich Pzena of Pzena Capital had noted there was actually significant long-term value in Freddie Mac (NYSE: FRE) in a presentation at the Value Investing Congress. It appears that after major price drops in November, short sellers declared victory on the key Government Sponsored Entities (GSE's):

STOCK (Ticker) -- DEC 14, 2007 -- NOV 30, 2007
Fannie Mae (NYSE: FNM) -- 27,966,738 -- 50,553,635
Freddie Mac (NYSE: FRE) -- 20,658,388 -- 34,805,691

There were also some slight decreases to short interest in some of the other major financial stocks: JPMorgan Chase (NYSE: JPM) (one of the 2008 Dogs of the Dow stock), Washington Mutual (NYSE: WM), and Bank of America (NYSE: BAC).