Gyroscopic Investing

Posted: **Fri Feb 05, 2021 11:53 am**

I’m just bumping Glenn's question from the GME thread:

glennds wrote: ↑Wed Feb 03, 2021 8:35 pm I'd like to better understand the ramifications of short interest greater than 100% of a company's stock. Obviously it is not possible in this situation for all short positions to be covered. So what happens to those positions that cannot be covered? Is it the broker that is on the hook for selling a naked short (i.e. selling the short position when the broker does not have access to the underlying shares)?

In reality, long position stockholders have to agree to lend their stock in the first place, and not all will do so, so I would think the universe of stock available to brokers would be some number significantly less than 100% thus exacerbating the naked short situation? Unless the broker is forced to go out an acquire the shares on the open market in order to cover the transaction?

Or is it a situation like fractional banking where so long as there isn't a run on the bank the house of cards continues standing?

I'd appreciate it if anyone could explain this aspect of the mechanics.

Posted: **Fri Feb 05, 2021 10:38 pm**

It's like a dollar bill that can be passed along. People who borrow a stock can lend it to someone else and so on down the line. The more this is done the more likelihood that a sustained move up will be accelerated by people covering. This shouldn't super surprising either. It is by no mean uncommon for shares traded in a day to far exceed shares of the company being traded.

Posted: **Tue Feb 09, 2021 1:42 pm**

In an overall macroeconomy, the money multiplier is one thing.
I understand why the short interest will push the stock up temporarily. But for short interest to exceed total stock outstanding for a sustained period of time I do not understand.

Maybe the answer is that it's a freak aberration, and what the Redditors did was opportunistically pick up on it and rallied a buying wave. Today I was looking at short interest trackers that you can google. I was not able to find anything in real time, but the list I found dated three weeks ago had a handful of stocks over 60%, one over 70% (Virgin Galactic).
I don't think this area is for me, but it's all very interesting and something new to learn.

Gyroscopic Investing

When Short Interest Exceeds 100% of Stock

When Short Interest Exceeds 100% of Stock

Re: When Short Interest Exceeds 100% of Stock

Re: When Short Interest Exceeds 100% of Stock