Pessimists could be nervous
The strong run in genomics stocks is, not surprisingly, bringing out the short sellers.
Looking at the data, short interest began to ramp up last June for nine of the 10 public companies that could be loosely defined as genomics plays. The motivation for shorting is obvious, as all 10 stocks posted triple-digit percentage gains through last Jan. 14, the latest available date for short interest data, and all 10 have continued to climb since then, too. During this period, only Lynx (LYNX) has seen its short interest fall (see below).
By contrast, shorting of Human Genome Sciences (HGSI) surged by 4.7 million shares (484 percent) to 5.7 million shares between June 15 and Jan. 14. HGSI was up 328 percent over the period to a split-adjusted $92.313, and closed Friday at $149.75.
CuraGen's increase looks enormous - 6417 percent - but amounts only to 221,242 shares, up from 1,871 shares at June 15, when the stock was trading at $6.875. CRGN's short interest ratio (SIR) is still less than 1. SIR, computed by dividing a company's total short position by its average daily volume (ADV), shows how many days it would take to clear a company's short interest at current trading levels.
Indeed, despite the increased shorting, SIRs for eight of the 10 companies decreased in the period thanks to booming increases in ADV.
The short positions may increase