What is short interest? Does it have anything to do with short attention spans?
Pardon? Short interest? Oh yes! Ahem, short interest is simply the total number of shares of a company that have been sold short. The Fool believes that the best shorts are those with low short interest. They present the maximum chance for price depreciation as few short sales have occurred, driving down the price. Also, low short interest stocks are less susceptible to short squeezes (see below). Short interest figures are available towards the end of each month in financial publications like Barron’s and the Investor’s Business Daily. The significance of short interest is relative. If a company has 100 million shares outstanding and trades 6 million shares a day, a short interest of 3 million shares is probably not significant (depending on how many shares are closely held). But a short interest of 3 million for a company with 10 million shares outstanding trading only 100,000 shares a day is quite high.
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