Hey guys, When you’re looking at a potential investment or trading opportunity, how much do you look into short interest ratio and related metrics? How do you think about these things in the process of making an investment decision, assuming you are a fundamental investor? How does your benchmark for what you consider to be a high short interest ratio vary based on sector and capitalization?
numi Wrote: ------------------------------------------------------- > Hey guys, > > When you’re looking at a potential investment or > trading opportunity, how much do you look into > short interest ratio and related metrics? How do > you think about these things in the process of > making an investment decision, assuming you are a > fundamental investor? How does your benchmark for > what you consider to be a high short interest > ratio vary based on sector and capitalization? Numi- My PM is pretty concerned with it, especially in the early stages. If 10%+ of the shares outstanding are short, and we can’t very firmly articulate why the shorts are wrong, then we either keep researching or admit that we’re just plain not sure of our findings enough to make a buy call on this particular company. As I think I told you elsewhere, we’re micro- and small cap (50mm to 1B) and this 10%+ ratio seems to be about the threshold, industry and capitalization don’t seem to matter much. Then again, this could be sampling error - as a rule, we tend to look at very conservatively capitalized companies, as we’re a value shop.
I look at it. Short squeeze.
These numbers are totally bogus. I knew a PM who had a larger short position in a name in his fund than the total short figure that was published by the exchange.
LBriscoe Wrote: ------------------------------------------------------- > These numbers are totally bogus. I knew a PM who > had a larger short position in a name in his fund > than the total short figure that was published by > the exchange. Is this Bloomberg?
Bloomberg pulls the numbers from the exchanges.
Not an uncommon scenario particularly since the SI values are only updated twice a month so if the manager opens/closes a significant short position it is not immediately reflected in the value.
very important and absolutely worth a look…ignoring it is like not checking under the hood of a car before you buy it
If I have a high level of conviction in a stock, and it happens to also have a high short interest all the better.
This wouldn’t reflect, or include, the options on it right?
No, but you can look at the open interest for the different series of options.
ChickenTikka Wrote: ------------------------------------------------------- > This wouldn’t reflect, or include, the options on > it right? I think not. Good question though. Is there some delta adjusted measure of total short interest in a stock that published?
I think you asked and answered your own question(s) and properly framed the issue: investment or trading?, it depends (sector), and size matters (mkt. cap). I follow short interest in SSYS closely; for SBUX, not so much.