Stock Talk: Overstock Over-Shorted

The story around Overstock.com is quite interesting. Last year I bought puts in this stock when it was a target for naked short selling. Since then, the stock has been battered, and heavily shorted. The CEO couldn’t take it, and has battled the short sellers all the way to the court. It’s always a bad idea to leave your company’s operations to go and attack what’s happening in the market. All that tells investors is that your CEO is weak, and can’t handle seeing his company’s stock take a correction. If Overstock’s CEO Patrick Byrne wants to scare away the short sellers, a better move would be to turn his company around and make it profitable.

… that turnaround seems to be a bit closer. Today, the stock bounced 16% off an analyst upgrade, who made favorable comments on the O’s operations. This comment scared some of the shorts which squeezed the stock up quite a bit today. There is still a lot of room above especially if the O does give numbers that beat the street, and trust me, there are a lot of shorts here! Overstock has a whopping short ratio of 10.5:

• Shares Outstanding: 20.5 Million
• Shares Short: 8.01 Million (that’s almost half!!)
• Shares Short last month: 9.09 Million (shorts are covering)
• Shares % of Float: 66.5%
• 52 week change: -36.50%

These numbers are from Yahoo Finance. A stock with these numbers can move fast on any news. Let’s see if the O can make its move in the right direction.

Next Stock Talk: VistaPrint Gets Dumped