Farrago
In regard to your question about short sales, I will re-post i made on another board about how short sales are reported. Since most people don't understand this and they would rather assume things instead of researching and getting the facts I will explain it to you.
Keep in mind that I am not stating that there is a large short position as there probably is. It just isn't anywhere near as large as people think because they don't understand about trade reports. Remember, this post was for a different stock.
See below:
I called FINRA to get a clarification on short sale reporting to see if things have changed since I left the business. Basically, it has not. There are many reasons why a sale would be reported as short. They are as follows and it will draw you a better picture of why on days like yesterday and today most sales are reported as short even though they are not:
If there is an actual short sale like this past Friday and Monday when 90% of the volume was on the offer. Those sales were actually short but the caveat is the MM's may have sold them on behalf of a customer who gave them an order to sell. They accumulated a short position over a few days and are now holding a sizable short position as the customer has not yet "filled in" the MM.
The customer now wants to "fill in" the MM and decides to sell it to the MM on the bid. The customer sells his stock to the MM on the bid yet the sale is reported as a short sale. This happens for one of many reasons.
1. The sale was done as a "Riskless Principal" trade. This means the customer goes to his brokerage firm and the firm just wants to execute the trade without risk so he goes to the MM and sells it on the bid and whatever the MM sells he buys from the customer at the same price. The broker gets a straight commission and it is therefore "riskless". That is reported as a short sale.
2. The customer is actually long the stock and has the certs but there is some kind of restriction on the certs. Since the customer has the physical shares (long) but it has to get a legal opinion or it has to be released by the transfer agent and it won't be released until after the settlement date it has to be reported as a short sale.
There are many other instances for reporting long sales as short as you can read on the SEC.gov site. It is Rule 200G.
In this case with this stock i believe it could be a combination of both things. Brokerage firm doing the sale as "Riskless Principal" transaction and people selling shares that were either just issued or were Rule 144 stock or stock with restrictions.
Buy-Ins are done for a few reasons. the main reason is that the "customer" wants physical delivery of the shares. They want delivery oo the shares for no other reason than they are trying to force the price of the stock up. This happens in stocks where most of the shares are tightly held by a person, group or firm. The object of the buy-in is to force the shorts to get bought in by purchasing shares higher. As these shares need to be purchased on a guaranteed delivery basis the group who holds the shares puts out the stock at inflated prices. The price rises trying to force other shorts to go out and cover.
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