Nektar Therapeutics (NKTR)

[SeriousMoney]

NEKTAR (NKTR): An interesting note about short positions from WR Hambrecht's research team that believes up to 17 million shares of Nektar held short may have to be covered (i.e., bought) before too long. Why? At the end of June the Russell 2000 index of small- and mid-cap stocks gets re-balanced. Hambrecht believes that at that time the four largest biotech firms will be removed from the index because they have grown too large, including Buy List companies Alkermes and Amylin.

The overall weighting for biotechs within the index needs to remain close to the same level and NKTR would be the only remaining biotech stock in the Russell 2000. Many, many hedge funds and mutual funds buy the stocks in the Russell 2000 as a basket, so if the weighting of Nektar goes up, the number of shares of Nektar that need to be bought to mirror the Russell 2000, goes up. If the weighting of NKTR goes up to equal Amylin's current weighting, Hambrecht believes the stock could hit $50. The "shorts" know this, so a short squeeze may start sooner rather than later.

BIOTECH ChangeWave 3/30/06
http://ww2.changewave.com/bt_login.html?dest=/biotech/