Thoughts on Short % of Float

[hlacheen]

Can you gain anything meaningful using this metric?

One of my holdings in particular, PRAA, I noticed has a Short % of Float of 35.5% according to Yahoo. This seems really, really high. The number of shares short has also been rising. It is 5.5m as of April 10th, and it was 4.5m the month prior.

I'm more of a fundamentals investor type of guy, can any traders give me some insight on the implication of a large amount of shorts, if any?

[Scorpion Man]

[ QUOTE ]
Can you gain anything meaningful using this metric?

One of my holdings in particular, PRAA, I noticed has a Short % of Float of 35.5% according to Yahoo. This seems really, really high. The number of shares short has also been rising. It is 5.5m as of April 10th, and it was 4.5m the month prior.

I'm more of a fundamentals investor type of guy, can any traders give me some insight on the implication of a large amount of shorts, if any?

[/ QUOTE ]

Generally a large amount of short interest (assuming its not from a convert being hedged) indicates a significant amount of skepticism among the investment community regarding a company's prospects. Many of them are "scummy". Others are hyped companies with interesting stories that will find it hard to actually earn real money.

There have been some statistical studies that say heavily shorted stocks underperform. That said, just about the best stock you can own is a heavily shorted stock where the shots are wrong.

[hlacheen]

Thanks... I hate the idea of all these shorts knowing something I don't. I'll have to do a lot of reading tomorrow.