Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Painful Two Weeks for Biotech Short Sellers


Here's the creek, where's the paddle?


As the NASDAQ Biotech Index (NBI) prepares to break through another resistance level, one has to wonder how morale is on the other side of the trade. One way we've been gauging this is to follow short interest in the biotech sector. While I'm well aware of the limitations of short interest as a sentiment indicator, particularly in a market increasingly dominated by zero-volatility hedge funds, sometimes we have to make due with what we have. Morale "over there" has been pretty darn good as the chart below shows.

I've focused down on something we publish to our own Subscribers each month - the 15 most heavily shorted companies on the NBI as measured by short interest as a percentage of their float. I've taken a measure of their performance since the short interest as-of day on August 15 through the end of last week. I think you'll find the table illuminating...

Does this mean returns in these companies were accelerated by short covering given their broad outperformance of the overall NBI? I'm not sure we can say that. I think all we can say is for those short these particularly heavily shorted biotech names, the last couple of weeks of August were no picnic.

< Previous
  • 1
Next >

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos