How to Track Short Sellers of Your Online Stocks
You might be interested to find out how many investors are shorting a stock you own, a statistic known as short interest. Some investors even incorporate tracking short interest in their strategies by seeking stocks that are heavily shorted, on the theory if the shorts are wrong the stock might surge higher in a short squeeze.
A short squeeze is what happens when the short sellers get nervous that a stock they’re betting against will rise and they rush out and buy the stock back so that they can return it to the brokers they borrowed it from. Short squeezes can cause a stock to skyrocket as the shorts buy shares.
Exchanges release short interest data on stocks on the third Monday of each month. You can easily get the data online. A helpful source is NASDAQ.com, shown in the following figure.
You can look up the level of short interest on almost every stock, including those that trade on other exchanges such as the New York Stock Exchange. Here’s how:
Point your browser to Nasdaq.
Enter the stock’s name or symbol in the Search field, and then either click the name of the company when it pops up or on the Search button.
Choose Short Interest from the menu on the left side of the screen.
You see a detailed list that shows you the number of shares being shorted, as shown. That number in itself doesn’t tell you much because different companies have different numbers of shares trading, or shares outstanding.
So, to put the level of short interest in perspective, you also get to see the average daily share volume — the number of shares that usually trade hands in a given day. Lastly, you see days to cover, which is the number of days it would take, on average, for the number of shares that are being shorted to trade. Days to cover is calculated by dividing the number of shares shorted by the average daily share volume. The bottom line? The higher the days to cover, the greater the amount of real short interest in the stock.