Alteryx question

Hello,
as an introduction I am a long time Fool member and I am a long time lurker (+2years) of this board.
Sofar I have not had anything meaningful to contribute to this board as I was reading and learning
Today, hopefully comes something useful.

But first a big thank you to Saul and to the many things that I have been able to learn from the members of this great board.

Now to my Alteryx question - I am holding the stock ~5% allocation and I have checked the short interest (source Morningstar) today.

There are currently 60.22 mill shares outstanding but the current float
is only 9 mill shares. The rest of the shares are held by funds and institutions.

From these 9 mill shares 3,14 mill are sold short (as of March 15th) which brings the shortage ratio to 34.9% of the float.

Don‘t you think this is a very bullish sign for the stock ?
With every upward movement of the stock, more and more shorts will be forced to cover.

But before adding to my position I would like to hear your opinions
on this matter.

Regards
Freddy

7 Likes

There are currently 60 mill shares outstanding but the current float is only 9 mill shares. The rest of the shares are held by funds and institutions. From these 9 mill shares 3.14 mill are sold short (as of March 15th) which brings the shortage ratio to 35% of the float. Don‘t you think this is a very bullish sign for the stock ?

Hi Freddy, I wouldn’t buy them on just on the hope of a short squeeze. If there are 51 million shares held by institutions, if one of them should decide to add or subtract, it would overwhelm 3 million short shares. After all, that’s still just 3 million our of 60 million, which isn’t a huge short position at all.
Saul

By the way, are you French?

4 Likes

Hi Saul,
thanks for your quick reply.
If I compare the 3 mill to 60 mill, then the ratio seems quite normal.
I was only thinking that institutions and funds would more likely hold their shares.

No I am not french - I am a US citizen but work and live in Vienna,Austria but I speak and understand French on a very basic level.

Regards
Freddy

No I am not french - I am a US citizen but work and live in Vienna,Austria

Just a couple of punctuations that I guess your computer did. Probably European. (space before ? and 3,14 mill instead of 3.14 mill).

Don’t institutions sometimes lend stock to short sellers? That way, they could make some money from the fees charged.

Don’t institutions sometimes lend stock to short sellers?

As do individuals. I am currently getting 9% for my MZOR from Schwab.

Don’t institutions sometimes lend stock to short sellers? That way, they could make some money from the fees charged.

They do and they do! When you open a margin account you sign a contract with the brokerage giving them the right to lend out your shares to short sellers. You can find out if they did at divided time. If your shares are lent out the company does not pay you the dividend, it goes to the current owner. Instead the short seller has to pay you the dividend. The wording of the brokerage entry is different, I don’t recall the exact wording but it is something to the effect that it is a payment in lieu of the dividend.

Denny Schlesinger

When you open a margin account you sign a contract with the brokerage giving them the right to lend out your shares to short sellers

This isn’t necessarily true for all brokers. For instance, IB has a program that you can sign up for to lend your stocks and you get paid for it as well!

I do not believe they lend your stocks without you signing up for the program.

A.J.

This was true with Schwab. They have very explicitly asked if I wanted to participate and told me the terms.

They also deposit cash in the new account equal to value of the securities as collateral and keep updating that as the value changes.

I do not believe they lend your stocks without you signing up for the program.

I don’t know about IB but with every broker I ever had a margin account with I had to sign a contract that gave them the right to lend my shares. I think it’s a win-win situation.

Denny Schlesinger