Foodles recently asked a very good question…
What’s the highest short percentage anyone’s heard of on a stock?
I started this board 17 months ago and early on said I avoid high shorted stocks because they are usually insiders/market makers that know more than the public which makes them a risk. However, when they get it wrong it becomes a large opportunity.
Nov 11th: Nvidia went up 30% in one day based on a blowout quarter and an article said it was a short squeeze. NVDA only had 13% of float shorted. 14 trading days later it remains at the peak level of that first day.
Nov 15th: DRYS share price went up from $5 to a peak of $102 1940% in 4 days and then in the following 5 days retuned to the $5’s. DRYS only had 13% of float shorted too.
This is the very definition of a short squeeze:
a rapid increase in the price of a stock that occurs when there is a lack of supply and an excess of demand for the stock. Short squeezes result when short sellers cover their positions on a stock, resulting in buying volume that drives the stock price up. They have to do this because the risk of shorting a stock is infinite (the price can always go higher), but the risk of owning (long) a stock is only the value of the stock you own (the price can only go to zero).
the number of shares that are actually available for trading when you subtract restricted shares from the shares outstanding.
Now Nvidia has a market cap of ~$47B with 514M shares floated and Dry Ships has a market cap of only ~$5.3M with only 1.0M shares floated. So of course the squeeze is going to have a larger effect on a micro cap vs a large cap company. By the way, Bofi Holding has a market cap of ~$1.5B with 23M shares floated. Which is ony 3% to 4% of the size/amount of Nvidia!
So to answer Foodles’ question…
There are only 5 more shorted stocks (as a % of float) on Nasdaq than BOFI which is at 42.5%:
INSY – 75%, EGLT - 55.7%, TREE- 52.5%, CZR – 52.3%, JAKK - 43.5%
There is only 1 more shorted on the NYSE Market:
And only 5 more shorted on the NYSE:
RES – 53.1%, EPE – 48.9%, ATW – 43.2%, CRC – 42.6%, PSTG - 42.5%
For those who also didn’t even know there was a NYSE and a separate NYSE MKT. I looked it up. NYSE Mkt is currently marketing itself as the market for small cap companies. It was the former American Stock Exchange AMEX till 2008, when it became NYSE Alternext U.S. till 2009, when it became NYSE Amex Equities till 2012, when it became NYSE MKT. Gee – I wonder why I didn’t know.
So Insys Therapeutics, Inc. is the most shorted stock in the world and Bofi Holding is the 11th.