Short Interests in Pfizer and Dendreon Decline - Is Bearish Sentiment Dissipating?

I know that simply pointing this out will draw the ire of certain Pfizer (PFE) investors who happen to read my blog, but the fact is that PFE is the only major pharmaceutical company whose short interest is big enough to crack the Barron's Top-40.

PFE comes in at #20 with 56,385,734 shares sold short as of November 14th. But the short position in the stock shrank by 12,000,000 from Halloween to the middle of last month. That decline ranks as the seventh-biggest among stocks listed on the New York Stock Exchange. CNBC's parent company, General Electric (GE), saw the sixth-largest drop. The short list appears in this week's issue of Barron's.

Investors who "short" a stock are betting the price will fall and hope to make money if/when it does. So, PFE "shorts" have been pocketing some profits as the stock has fallen about nine bucks over the past year or so.

Turning to the Nasdaq, the short interest in the baby biotech Dendreon (DNDN) continues to go down. DNDN is no longer in the Barron's Top-40 of Nasdaq companies with the largest short positions or on the Top-50 list of largest short interest ratios. But the decline from Oct. 31st to Nov. 14th did place Dendreon 14th among the 15 Nasdaq stocks with the biggest short interest drops during that period. Nearly 20,000,000 shares were still held short by the middle of last month--a drop of about four-and-a-half million or 18 percent.

Overall, the short interest fell nearly six percent on the Nasdaq and nearly two percent on the NYSE. So, maybe the changes in PFE and DNDN were market driven or maybe they're a sign that bearish sentiment, at least on those two stocks, is dissipating.

Comments

[Dan Jacome:]

it cant be a cheap stock to short! PFE pays an 8% div yield! The short selling hads to be related to 2 things: the well known 2011 Lipitor cliff, but also to the heavy dilution coming to PFE holders if its does a deal in 2009 (likely, even though the CEO says no) and they use stock to execute it

2008 Dec 03 09:38 AM

[Ames Tiedeman:]

So many see no hope in an approval from DNDN. I do not know what to make of the data.

2008 Dec 13 12:18 PM