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Author Topic: new short interest reporting - any comments?
blue_in_MI
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anyone check out the new short interest reporting link on otcbb.com yet?

http://otcbb.com/asp/OTCE_Short_Interest.asp

i plugged a few stocks in, was curious:

GFCI: in their PR today, they complained about "naked shorting". short interest as reported by this new link: 107,141; about $17K.

NDOL: lots of talking amongst the longs about how the "shorters will get toasted when they have to cover, yada yada yada. short interest reported on this tool: 57,124 shares, $10K range.

NMKT: verges loves to complain about naked shorting driving NMKT down. short interest reported on this tool: 82,508 shares, $30k-ish.

could plug quite a few in, these were just the first that came to mind. one caveat is that i guess this is only the total amount of shares short this month, not cumulative. one could argue that the total number of shares shorted could be much much bigger than just this initial july listing number.

my initial reaction? pretty small numbers: pretty much coincide with my general feeling that "naked shorting" is too often used as a crutch/excuse for one making poor investment decisions. it's always easier to blame the faceless "naked shorters" than oneself.

but - i'm a pro/con kind of guy, and i know that some highly respected posters here are strong believers in the whole naked shorting thing. i admit also i just ran across this and haven't researched it much.

anyone with any opinions or thoughts about this? anyone plug in a stock and find some surprisingly big or small short interest numbers? anyone want to argue that this is a valid reflection of the true short count, or vice-versa that it's a bogus number designed to keep the small investor in the dark while the big money is made behind the scenes?

like i said - i have a mild predisposition against the whole "naked short" thing, because i see it used so often as a crutch to support poor stock choices. i've even seen RVNM/RVMN/RVEM posts bashing the "naked shorters"! i also admit that i think it's time to run for the hills if a CEO of a company you own starts talking about naked shorts publicly, rather than focusing on his or her own business. but - i'm open to and curious for discussion, and always try to see both sides of the coin.

anyone have any thoughts on this new reporting regulation/otcbb link?

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glassman
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there's a trick to keeping it off the list blue...

the MM's just trade between themselves so they can roll over the closing date...

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T e x
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I'm in the dark on that part, glass

MM "A" naked shorts Stock B on date C. How is that naked short "rolled" to MM "D"?

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Nashoba Holba Chepulechi
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glassman
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have you ever heard of check kiting? same principle...

they can make the settlement happen by shorting more...

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glassman
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reading this site even more closely? i see no mention of failure to deliver at all...

it's simply "short positions"

NASD Rule 3360 has been expanded to require NASD member firms to report their short positions on all over-the-counter ("OTC") equity securities to NASD Regulation, on a monthly basis

this seems to me to be the proof that dispells the rumor that "pennies can't be shorted"

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T e x
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quote:
Originally posted by glassman:
have you ever heard of check kiting? same principle...

they can make the settlement happen by shorting more...

I get the principle; I don't get the mechanics of moving a naked short---o, wait, maybe I do. Second MM "lends" shares to first, then third MM to second?

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Nashoba Holba Chepulechi
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glassman
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yes.... they borrow more (if they have to) and then sell to the other and so-on...
the MM's don't have the same rules as us poor pukes...

and that's what i'm fairly sure i've been watching for a few days on fhal...

obviously i can't be sure....

as for the one day to settle? i don't think that site is worth much...

short interest on one day per month....

this month? is the 14th....

next month it's the 15th...

sept. 15th..... etc...

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glassman
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http://www.sec.gov/divisions/marketreg/mrfaqregsho1204.htm

this page has a lot of good info....


Question 4.7: Market makers, as defined in Section 3(a)(38) of the Exchange Act, include block positioners. Regulation SHO provides an exception to the locate requirement for market makers. Are all block positioners excepted from the locate requirement?

Answer: Rule 203(b)(2)(iii) provides an exception from the locate requirement for short sales effected by market makers, but only in connection with bona-fide market making activities. Rule 203(c)(1) provides that the term “market maker” has the same meaning as in Section 3(a)(38) of the Exchange Act, which defines “market maker” as “any specialist permitted to act as a dealer, any dealer acting in the capacity of a block positioner, and any dealer that, with respect to a security, holds itself out (by entering quotations in an inter-dealer communications system or otherwise) as being willing to buy and sell such security for its own account on a regular or continuous basis.”


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T e x
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I realize I may be jaded...and I do *agree* this is another *tool,* but I also hear MM laughter in the distance..."one step ahead" syndrome... iow? they've had time to plan their reactions, "we" are just figuring it out, lol

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Nashoba Holba Chepulechi
Adventures in microcapitalism...

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blue_in_MI
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interesting thoughts. i agree it wouldn't suprise me if there was a little MM monkey business going on. but i admit that i haven't studied enough that am not sure about the mechanisms and loopholes.
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Purl Gurl
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Blue, this is a good tool you found.

I tried ALMI and IESV stock for July.

almi 95,890 100.00 91,802 1.04

iesv 471,548 N/A 1,629,972 1.00

Readers, first number is short shares.
Last number is days to clear (cover).

Second number is percentage of average
daily volume (I think) and the third
number is average daily volume.

Cool tool, Blue!

Purl Gurl

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Purl Gurl
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Blue, today ALMI dipped, suddenly, to 1.92 or
there 'bouts. Sprang right up again. Using
your short position tool, this suggests
Market Makers (or client) are shorting to
load up then sell on rebound.

I like that tool!

Purl Gurl

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Purl Gurl
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I write,

"...this suggests Market Makers (or client) are
shorting to load up then sell on rebound."

A bit confusing. Front Running and Lost Leader
selling and buying. Market Makers can manipulate
a stock by sitting on orders instead execution.
This is Front Running. Market Makers can also
sell and buy their own shares, at any price,
to create a downturn or an upturn. This is
Loss Leader activity; suffer a small loss in
return for larger profits.

Front Running is unlawful but very common.
I do not know of any rules against Loss Leader.

Purl Gurl

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blue_in_MI
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seems like every stock i plug in has a "days to cover" of between 1.0 and 1.1. only tried 10 or 12 stocks, but - seems like every one is right in that range. weird.
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Dustoff 1
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Always new about "clients" However the depth of client involement within the MM'S circles varies with the MM.. The type of client is key..But those deals are made on the Golf course in the carts.
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blue_in_MI
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ok, looking a little closer: based on the short shares and average daily volume, the "days to cover" field always rounds up to 1.00. ALMI is actually the highest i can find at 1.04, after plugging in about 20 of my OTC holdings. anyone run across one that actually tops 1.5 or so days to cover?
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T e x
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quote:
Originally posted by glassman:
http://www.sec.gov/divisions/marketreg/mrfaqregsho1204.htm

this page has a lot of good info....


Question 4.7: Market makers, as defined in Section 3(a)(38) of the Exchange Act, include block positioners. Regulation SHO provides an exception to the locate requirement for market makers. Are all block positioners excepted from the locate requirement?

Answer: Rule 203(b)(2)(iii) provides an exception from the locate requirement for short sales effected by market makers, but only in connection with bona-fide market making activities. Rule 203(c)(1) provides that the term “market maker” has the same meaning as in Section 3(a)(38) of the Exchange Act, which defines “market maker” as “any specialist permitted to act as a dealer, any dealer acting in the capacity of a block positioner, and any dealer that, with respect to a security, holds itself out (by entering quotations in an inter-dealer communications system or otherwise) as being willing to buy and sell such security for its own account on a regular or continuous basis.”

jeez, it never stops...

"block positioner"

[Roll Eyes]

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Nashoba Holba Chepulechi
Adventures in microcapitalism...

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Purl Gurl
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"anyone run across one that actually tops 1.5 or so days to cover?"

Still playing with your tool, Blue.

Feel good for you?

Tex, think about adding Blue's link to your
list of tools for reader's use. This is
a darn decent tool.

Purl Gurl

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Purl Gurl
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"...as being willing to buy and sell such security
for its own account on a regular or continuous
basis."

This allows Loss Leader. Market Maker, broker,
whomever, can buy and sell shares of their own
(self contained account) to present a picture
of what is not.

No commission fees, no money actually lost
nor any profits gained, for Loss Leader. Has
to be done on the open market, obviously.

Once a "picture" is painted for common traders,
then a Market Maker begins making the bucks.

Only risk of which I know, is when a trader,
purely by timing and chance, falls into a
Loss Leader; buy or sell when not expected
by the Market Maker. However, some Market
Makers do buy or sell from traders to maintain
a "legitimate" appearance on books.

Nonetheless, blaming Market Makers for stock
manipulation is too frequent of an excuse.
Market Makers do manipulate share prices but
not to the extent which is claimed.

This excuse making is usually made by bag holders.

Purl Gurl

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glassman
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purl....
this is only for one day per month...

Monthly short interest information will be available on this site after 4 pm ET on the dissemination date.

Trade Date Settlement Date Dissemination Date Publication Date
July 7/11/2006 7/14/2006 7/25/2006 7/26/2006
August 8/10/2006 8/15/2006 8/24/2006 8/25/2006
September 9/12/2006 9/15/2006 9/26/2006 9/27/2006
October 10/10/2006 10/13/2006 10/24/2006 10/25/2006
November 11/10/2006 11/15/2006 11/27/2006 11/28/2006
December 12/12/2006 12/15/2006 12/27/2006 12/28/200

it's nearly worthless....

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Purl Gurl
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Yes, not as much information as we would like.

Maybe in the future, using software, more current
and more up-to-date information will be there.

Still, a useful tool for research. This does
help readers to look back at past events to
learn if short positions are involved. This
will help with learning about signals.

Major problem I see is self-reporting. Doubtful
that many brokerage houses actually fully report.

What I am seeing is an ongoing effort to make
shorting and naked shorting more transparent
for the public. Long ways to go, but this is
happening which benefits us.

By the time we are really old, forgetful,
addled in the head, cannot remember our
names nor how to get back home, the markets
will be fully transparent!

Purl Gurl

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glassman
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not one single mention of failure to deliver...

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Don't envy the happiness of those who live in a fool's paradise.

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T e x
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does allow some back-testing...

agreed

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Nashoba Holba Chepulechi
Adventures in microcapitalism...

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fourseven
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quote:
Originally posted by blue_in_MI:
ok, looking a little closer: based on the short shares and average daily volume, the "days to cover" field always rounds up to 1.00. ALMI is actually the highest i can find at 1.04, after plugging in about 20 of my OTC holdings. anyone run across one that actually tops 1.5 or so days to cover?

Yah man, try XSNX: 1.58 days to cover... short interest is 3,132,233 while daily average volume is 1,982,280

I've got to thread that one into my stockmonkey tool.. this is neat.

If I understand this correctly, they show how many short postions there are outstanding by the 15th of each month? So stocks with high days-to-cover ratios would be more prone to shorts covering, wouldn't they?

Look at this list to find more high-ratio ones.. there's some that have a days-to-cover ratio of 999.99 ... that's got to be a glitch in the system, or dead tickers..

I think it would be good to find ones with high ratios, and among these find ones that are fairly liquid.. they could pop when shorts cover..

Am I right assuming this, or way off the mark here?

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PCola77
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I'll admit I just skimmed the posts here, but the days to cover just means if they bought every one of the shares that were traded on an average day, it would take this many days to cover. It rounds anything under 1 to 1 and anything over 1000 to 999.99. Try CWPUF as an example. Also, PAIV is shorted at over 10x average volume, and almost 10 times the float (which is approximately 27million). Read the PAIV thread on the under .10 board for more details if you so desire.

Also, I think Purl Gurl was a bit off on some of the column headings, so I'll paste them here.

Security Name Security Symbol OTC Market Current Shares Short Average Daily Share Volume Days to Cover


In addition, you can easily get the entire list of 6,687 stocks listed if you click on the "Downloadable file" on http://www.otcbb.com/asp/OTCE_Short_Interest.asp

You can then get it into excel and sort it however you want. I sorted it by "days to cover" where daily volume is at least 100,000 shares, and the stock symbol is 4 characters. (This eliminates symbols ending in "F" or "Q", etc.)

If you don't know how, or don't feel like taking the time to do it, you can PM me and I'll e-mail you the Excel file if you'd like.

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PCola77
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Also, I'd like to read more, but there is plenty of room for interpretation with this list. People have been saying that the list is just for the month of July, but there's got to be a better definition for what that means. It can't just be "there were 100,000 shares sold short in the month of July" without saying "But 99,000 of them have been covered". unless the number is just the net number. My gut instinct is that the number is more "This is how many shares are shorted as of July 15th" meaning net total of all mothns, as of a certain date.

I could be way off, but that's why I said it seems to be open to interpretation.

Thoughts?

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Purl Gurl
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"Also, I think Purl Gurl was a bit off on some of the column headings, so I'll paste them here.

Security Name Security Symbol OTC Market Current Shares Short Average Daily Share Volume Days to Cover"

This is not in keeping with my article nor with
what is presented in my browser.

 -

Purl Gurl

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PCola77
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Sorry, I am looking at the one in this link: http://otcbb.com/dynamic/shortinterest/shrt200607.txt

Didn't realize tha there were different formats.

quote:
Originally posted by Purl Gurl:
"Also, I think Purl Gurl was a bit off on some of the column headings, so I'll paste them here.

Security Name Security Symbol OTC Market Current Shares Short Average Daily Share Volume Days to Cover"

This is not in keeping with my article nor with
what is presented in my browser.

 -

Purl Gurl


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glassman
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My gut instinct is that the number is more "This is how many shares are shorted as of July 15th"


this my deduction as well....
its not very clear is it?

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PCola77
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The other thing that makes me think that is the fact that they have "Current" Previous" and "% Change". Seems like anything else wouldn't make sense for what "Current" would mean.

quote:
Originally posted by glassman:
My gut instinct is that the number is more "This is how many shares are shorted as of July 15th"


this my deduction as well....
its not very clear is it?


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Purl Gurl
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"...report their short positions on all over-the-counter
("OTC") equity securities to NASD Regulation, on a
monthly basis...

Firms are required to report their short positions as
of settlement on the 15th of each month...."

One month reports updated the fifteenth of each month.
Next update will be August 15, or before if not
a business day.

Purl Gurl

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PCola77
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By the way, these are the 14 symbols and their "days to cover" that I found with over 100,000 in daily volume that have over 5 "days to cover:

OCAI 34.71
VXGN 14.29
MNCP 13.95
HLSH 12.45
PAIV 10.82
SELA 9.20
SURE 8.75
IPXL 7.90
CYBR 7.38
EDIG 6.41
CDSS 6.28
MICG 5.72
NEOM 5.15
TIDE 5.13

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PCola77
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So do you think that would say what I thought it meant, meaning as of that date, these are the net shorts that are out there?

quote:
Originally posted by Purl Gurl:
"...report their short positions on all over-the-counter
("OTC") equity securities to NASD Regulation, on a
monthly basis...

Firms are required to report their short positions as
of settlement on the 15th of each month...."

One month reports updated the fifteenth of each month.
Next update will be August 15, or before if not
a business day.

Purl Gurl


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glassman
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how can they have 34.71 days to cover?

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PCola77
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They don't "HAVE" 34.71 days to cover, it means that it would take them 34.71 days to cover if they bought every share on an average trading day. All it is is the (short shares)/(avg volume)

quote:
Originally posted by glassman:
how can they have 34.71 days to cover?


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