Enthusiasm for betting on a fall in the share price of some of the world’s biggest solar companies is high, according to Data Explorer.
They say that almost 16 per cent of outstanding shares in First Solar, which last week joined the S&P 500, are available for loan as of October 23. That was more than a third higher than a week earlier, when it was 11 per cent.
While gauging just what different levels of short interest indicate is an inexact science, 16 per cent is considered a rather big number.
VW provides a good example – several hedge funds had their fingers burnt after the car maker’s share price soared. These funds had been betting on just the opposite – short interest in VW peaked at 16.39 per cent in September 2008.
Data Explorer also notes that 4.3 per cent – still a relatively high number – of shares in GT Solar were available for loan last Friday, and utilisation rate for that stock was close to 100 per cent.
Shorting, however, as others have learned, can be a risky business.
Shorting the rally (FT Alphaville, 14/09/09)