The short interest in Ford (NYSE: F), rose 11.3 million shares to 283.1 million. The numbers compare shares sold short on April 30 in contrast to the number on April 15. Ford is now the most shorted company listed on the NYSE.
Ford has made a big deal about its turnaround. Some investors are buying the story. Ford's shares are up 20% this year.
But short sellers have a case, and it's a powerful one. Ford's US sales are still down by double digits most months. Sales of its most profitable cars and trucks, including its flagship F-150 pick-up, are dropping sharply, probably because of the rising cost of gas.
Ford's case is that it can continue to cut costs in the US and that its international sales are good. It is an argument that does not hold water. Ford has about 15% of the domestic market. How far can that fall? US sales need to support the company's factory and management costs on top of product development and design.
Ford can't count on all of those dollars coming from overseas.
It is always interesting to see the changes in short interest, particularly when you are right in the middle of earnings season. It seems the short sellers have gotten a little less confident on the "digital four" of the NASDAQ. In fact, the only one of the four that saw an increase was only a tiny increase.
As you will see below, the major components of the NASDAQ top digital companies saw real short covering ahead of earnings. Keeping conviction against stocks is frequent, but the lessons of eternal pessimism have historically shown to not be a winning strategy.
Microsoft Corp. (NASDAQ: MSFT) Short Interest Change Avg, Day Vol. Days to Cover 04/15/2008 109,056,265 (7.88%) 48,450,376 2.25 03/31/2008 118,383,897 (3.82%) 57,762,166 2.05
Google Inc. (NASDAQ: GOOG) Short Interest Change Avg, Day Vol. Days to Cover 04/15/2008 4,905,775 (5.84%) 5,368,787 1.00 03/31/2008 5,210,156 7.07% 6,382,427 1.00
Yahoo! Inc. (NASDAQ: YHOO) Short Interest Change Avg, Day Vol. Days to Cover 04/15/2008 36,104,797 (12.54%) 22,789,737 1.58 03/31/2008 41,280,401 (17.13%) 25,874,919 1.60
Oracle Corp. (NASDAQ: ORCL) Short Interest Change Avg, Day Vol. Days to Cover 04/15/2008 42,655,256 2.94% 34,868,017 1.22 03/31/2008 41,436,043 6.57% 51,966,613 1.00
As Oracle's earnings are still a ways out, the need for traders to cover there probably wasn't as critical as it was otherwise.
Jon Ogg is an editor and producer of the "10 Stocks Under $10" weekly newsletter for 247WallSt.com.
Either short sellers don't think a merger between Sirius (NASDAQ: SIRI) and XM Satellite (NASDAQ: XMSR) will happen, or they don't believe that the deal will save the two debt-laden companies. Short interest in Sirius rose 20.2 million shares for the period ending April 15 compared with March 31. Total shares sold short hit 157.9 million. Shares short in XM also pushed up 6.3 million to 22.7 million.
The bets may be smart ones. The delay in approving the deal at the FCC has probably made it less likely that the merger will get the green light. A number of members of Congress have loudly protested that the new company would be a monopoly, They reason that a new entity would eventually raise rates sharply because there will be no competition to dampen prices.
The core problem with the merger may be more profound. Subscriber growth rates at the two companies are slowing. Both also have negative net income. At this point, neither company has predicted when it might make a profit.
The biggest burden that the companies have is their debt. Each has over $1 billion in long-term obligation to repay bonds and loans. In a poor credit environment, it is hard to see that paper getting refinanced at better rates.
A new company, even with some cost savings, could have enough debt to sink it.
Douglas A. McIntyre is an editor at 247wallst.com.
The following story came to me this week from a reader who's sentiments may be shared by a lot folks. If I am the last one on the planet to have seen it and it has been circulating around the web for a long time, please excuse my redundancy.
The story pokes fun at business bureaucracy, mismanagement, corporate fairness, employee relations and more. Finding this type of story more often in your in-box displays a kind of recession fatigue and growing cynicism.
A foreign company and an American company decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race. On the big day, the foreign company won by a mile. The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.
Their conclusion was the foreign team had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing. Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion. They advised that too many people were steering the boat while not enough people were rowing.
NASDAQ has released its short interest for the end of March, with a March 31, 2008 cut off date. Overall short interest fell by a rate of some 1.2% on NASDAQ for the two-week period to 9,657,092,223. Interestingly enough, there were a few standouts that saw some major gains in short selling.
The percentage terms on Level 3 are not that great, but the raw number of shares is significant.
These were not the only gainers out there, but the bets against some of these rising short interest stocks were staggering. You can check NASDAQ short interest on any of these stocks or others at the NASDAQ Trader site dedicated to short interest.
The short interest in General Electric (NYSE: GE) rose sharply in the period ending March 31. The number compares to share short for March 14. GE's short interest rose 13 million shares to 57.9 million.
GE's stock has been doing relatively well recently. It has moved up 3% over the past three months while the S&P has fallen over 5%. Shares in the company are still considered a "safe haven" for investors when the economy is in poor condition.
But, the market may be concerned that slowing in the U.S. economy will not be offset by GE's growth overseas. Three of the company's units turned in only modest performances last year -- NBC Universal, the industrial group, and the medical equipment operations. Most of GE's big earning growth came from its huge infrastructure group.
A fall-off in infrastructure build-out in Asia and other emerging markets could cut into GE's most substantial opportunity for EPS improvement in 2008. With the first quarter over, that is the single most important thing investors will watch for in the company's earnings report. If sales at the infrastructure business do not move up sharply, GE shareholder swill have a long year.
Douglas A. McIntyre is an editor at 247wallst.com.
The short interest in most large stocks traded on the NYSE increased as measured on March 14. The figures compare to February 29. Car stocks were hit especially hard. Shares short in Ford (NYSE: F) moved up 20.3 million to 248.9 million. For GM (NYSE: GM) the number was up 19.4 million to 85.9 million.
Despite the fact that many big financial stocks are already close to lows, traders were willing to bet that they would fall off further. Shares short in Washington Mutual (NYSE: WM) moved up 15.9 million to 168.8 million. The short interest in Citigroup (NYSE: C) jumped 7 million to 125.6 million. For Wells Fargo (NYSE: WFC) the number added 9.3 million to 117.5 million. For Countrywide (NYSE: CFC) the figure was up 9.3 million to 111.5 million and at Wachovia (NYSE: WB) shares sold short were up 2.2 million to 105.4 million.
Other notable financial stocks with large increases included Fannie Mae (NYSE: FNM), up 11.4 million to 78 million, Thornburg (NYSE: TMA), up 11 million to 25.8 million, and CIT (NYSE: CIT), up 10 million to 20.1 million.
Troubled firms that have recently had bad news were hit very hard. Shares short in Sprint (NYSE: S) moved up more than any other NYSE-traded company, jumping 30.1 million to 75.2 million. Shares sold short in Blockbuster (NYSE: BBI) increased 8 million to 57.8 million.
Shorts moved out of Micron (NYSE: MU) where the number fell 4.3 million to 87.5 million, Wal-Mart (NYSE: WMT) where short interest dropped 3 million shares to 45.1 million, CBS (NYSE: CBS) which lost 2.7 million shares short falling to 29.2 million, The New York Times (NYSE: NYT) with shares short dropped 2.8 million to 30.6 million, and Time Warner (NYSE: TWX) which saw its short interest drop 2.2 million to 38.5 million.
It was just an average Wednesday night for me-researching potential stock plays, working on some blog posts and catching up on many overdue emails, all to further my goal of becoming Cramer 2.0-when I saw a post on EliteTrader.com that linked to The Smoking Gun exposing Governor Spitzer's call girl "Kristen" as 22-year-old Ashley Alexandra Dupre. Apparently, Kristen was/is her professional name. Always one to jump when opportunity knocks, I raced to dig up everything I could on Ms. Dupre to post on my blog and break some news of my own. What happened next might or might not blow your mind.
Several websites had already linked to her MySpace profile (owned by News Corp. (NYSE: NWS) so I went there and grabbed her photos to add to my story. The other sites had used the photos, too, but the pictures were all tiny and spread out over multiple pages (no doubt to increase their hits and subsequently their Yahoo! (Nasdaq: YHOO) ads, so I saw opportunity in providing them all on one page just as they were. But I didn't stop there.
I also searched other social networks like Facebook and bingo, she had a profile there! That would be "my exclusive." A few more clicks and the post was published. Within minutes, Google (Nasdaq: GOOG) has indexed my article and while I was late to the party, my "Facebook Exclusive" made my story unique and the hits tumbled in. I'm used to 200-ish visitors/hour, but thanks to this one simple post, 1,500 people visited my site within the first 45 minutes. And that's when things got interesting.
According to NASDAQ figures on short selling on February 29, shares sold short in tech companies dropped sharply, an indication that investors are not willing to bet that stocks in the companies will go lower. The numbers compare to figures on February 14.
Shares sold short in Intel (NASDAQ: INTC) dropped 5.8 million to 64.1 million. Shares short in Dell (NASDAQ: DELL) fell 5.3 million to 47.1 million. Share short in PMC-Sierra (NASDAQ: PMCS) dropped 3.7 million to 29 million. Yahoo!'s (NASDAQ: YHOO) short interest fell 2.5 million to 52.8 million. Shares short in Apple (NASDAQ: AAPL) dropped 2.2 million to 22.8 million. Shares short in Sun (NASDAQ: JAVA) dropped 2.1 million to 17.8 million.
Some of the largest techs did not escape larger bets that they would drop. Shares short in Microsoft (NASDAQ: MSFT) rose 3.4 million to 115.7 million, perhaps because of concerns about the Yahoo! deal. Shares short in Cisco (NASDAQ: CSCO) increased 3.3 million to 48.6 million.
Short interest for stocks traded on the Nasdaq showed big bets that major tech stocks would drop. The figures are as of February 15 and compare with the numbers on January 31.
Short interest in Microsoft (NASDAQ: MSFT) jumped 22.6 million to 112.3 million, almost certainly a bet that the company will buy Yahoo! (NASDAQ: YHOO), a purchase many holders oppose as a distraction. Oddly, Yahoo! short interest moved up 12.7 million to 55.2 million. This may be because some portion of Wall Street believes that Microsoft could drop its price or walk away from a deal completely. As internet ad revenue slows this becomes more likely.
The hardest hit stock among short sellers was Level 3 (NASDAQ: LVLT). Its financial results for 2007 were poor and the company is loaded with debt. If the need for bandwidth does not spike up in 2008, Level 3's earnings may not recover.
Shares sold short in Intel (NASDAQ: INTC) and Dell (NASDAQ: DELL) also moved up sharply, a sign that investors do not see the PC and server markets doing well in a downturn.
All in all, Wall Street is turning its back on the big tech companies.
Douglas A. McIntyre is an editor at 247wallst.com.
The New York Times fingers hedge fund manager William Ackman for yesterday's down market. That's because Ackman has been a vocal pioneer of the idea that bond insurers lack the capital to back their bets on the solvency of the bonds they insure and they might lose $24 billion as a result. And the holders of those bonds are banks and insurance companies which will be forced to write-down the value of those bonds -- to the tune of $70 billion more -- if the bond insurers lose their AAA ratings.
But Ackman's estimate of the losses from downgraded bond insurers is big and scary. His report yesterday predicted that MBIA and Ambac might lose $24 billion on the CDOs they guaranteed. That $24 billion is a significant percentage of the $1 trillion in municipal, corporate and mortgage debt that they insure with their AAA ratings. Unfortunately, ratings agencies like S.& P. and Moody's Investors Service may downgrade them due to a lack of capital relative to their potential losses.
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?
I was scheduled to appear this morning on CNBC's Squawk Box to discuss ways to profit from problems with consumer finance. Last night, my appearance was canceled -- I think it might have had something to do with the global market crash. But CNBC's loss can be your gain. Here's why I think the consumer will be the next shoe to drop in the economy and a few ways to profit.
Unemployment rate rising (to 5% in the most recent report)
Wage growth slower than inflation
Declining value of homes makes home equity borrowing a non-option
Savings rate -0.7% -- the worst since 1929
Consumer installment borrowing at record $2.46 trillion
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.
About 13 months ago, I suggested selling short shares of NovaStar Financial (NYSE: NFI) when it traded at a split-adjusted $116 a share. If you had followed that advice, you would have made a tidy profit -- it now trades at $1.79. If you covered your position today, you'd have a return -- before adjusting for the cost of margin escrow -- of 64x your investment.
According to The Associated Press, NovaStar laid off 85% of its people last week and its stock will be delisted on Thursday. Prior to the delisting, NovaStar had claimed that Wachovia Corp. (NYSE: WB), its lender, had given it a break by lowering NovaStar's minimum required liquidity from $30 million to $22 million.
Shares sold short in Yahoo! Inc. (NASDAQ: YHOO) dropped by 16.4 million to 39.1 million. It may be that rumors the company could be taken over have driven out shorts. There have also been news reports that the internet portal could cut as much as 20% of its staff to improve operating income.
Short interest at Intel Corp. (NASDAQ: INTC) fell 14.1 million shares to 55.6 million. The largest semiconductor company still appears to be taking market share from rival Advanced Micro Devices (NYSE: AMD). A bet against Intel is now largely a bet that global PC sales will fall. While the U.S. market may be soft, sales in Asia are still brisk.
One of the most troubled large companies listed on Nasdaq is Level 3 Communications (NASDAQ: LVLT). The firm still has the largest short interest of any listed on the exchange at 153.8 million. But, that fell 13.7 million between December 14 and December 31. The stock has fallen so far that investors may simply believe that shares will hold their own if financial results are acceptable. The stock has a 52-week high of $6.80 and now trades at under $3.
Short interest in Comcast Corp. (NASDAQ: CMCSA) dropped 7.3 million shares to 44.5 million. Market concern that telecom companies are taking cable TV and broadband customers have driven Comcast from $30 in the middle of last year to just over $17. Some analysts believe that this is too much of a correction and that cable firms still have the inside track for providing consumers with voice, broadband, and TV service.
Douglas A. McIntyre is an editor at 247wallst.com.
With shares of Movie Gallery (OTC: MOVIQ) having closed 2007 at just over 2 cents per share in the wake of the company's bankruptcy, I thought it would be fun to take a look at what the company was saying back in 2006, when its shares were trading more than 100 times higher.
You might think the company's CFO, Thomas Johnson, would have been busy looking for ways to stop the cash bleeding and return Movie Gallery's operations to something other than miserable failure.
But you'd be wrong. No, Johnson was actually conducting an interview with Bloomberg, saying that he had asked the SEC to investigate allegations of naked short selling in the company's stock:
"I'm throwing out the towel, saying 'Help me.' There are rules designed to deal with this, and people are still managing to do these naked short sales. It's extremely frustrating. It's like being on the front line and people are shooting you from every direction.''
"On the frontline... people shooting at you from every direction." I wonder if that's how Movie Gallery shareholders felt when the company recently filed a reorganization plan that canceled the stock of the company's common shareholders.
The moral of the story is this: When the bad management of a lousy company starts complaining about naked short selling ... go find a company where the management spends its time running the business.
The short interest in Ford (NYSE: F), rose 11.3 million shares to 283.1 million. The numbers compare shares sold short on April 30 in contrast to the number on April 15. Ford is now the most shorted company listed on the NYSE.
The following story came to me this week from a reader who's sentiments may be shared by a lot folks. If I am the last one on the planet to have seen it and it has been circulating around the web for a long time, please excuse my redundancy.
The 
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.
With shares of 
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