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"If the stock is so heavily shorted and

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Ninja7   Tuesday, 06/01/10 06:20:00 PM
Re: None
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"If the stock is so heavily shorted and we own more than the float, why isn't this reflected in the daily/monthly finra short numbers and the FTD (fail to deliver) numbers?" is one commonly asked question about float lock down (FLD) plays.

This is certainly a legitimate question and is often used by the bashers and doubters to undermine confidence in the eventual short squeeze and the claimed share ownership of the longs.

I made a couple posts concerning this on the C*** board, which I'll summarize here. Note that some of this may duplicate information already on this board, but here goes anyway...

The simple answer is that the finra and regsho numbers only reflect shorts that are cleared through the DTCC. The MM's can easily clear short transactions (naked and others) outside of the DTCC to avoid having them show up in the finra short and FTD numbers. In other words, it is easily possible that a stock may be heavily shorted (especially in pinkie land) and yet have close to zero FTD's and nearly zero monthly short interest.

For some more info, here are a few links that explain all this in more depth (in you haven't seen them already)...

http://www.businessjive.com/ (similar to the deep capture link below)
http://www.deepcapturethemovie.com/
http://www.daytrader.com/forums/showthread.php?t=40140


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