This is an interesting development, because the list of companies that can’t be shorted is expanding into companies outside the financial sector…
Here is the first news from Reuters
- NEW YORK, Sept 25 (Reuters) – Big U.S. drugstore chain CVS Caremark Corp (CVS.N: Quote, Profile, Research, Stock Buzz) and office property owner SL Green SLG.N were added to the New York Stock Exchange’s list of financial companies that are not permitted to be shorted.
- Other companies included in the ban as of Thursday were Willis Group Holdings (WSH.N: Quote, Profile, Research, Stock Buzz), MVC Capital MVC.N, Atlas Energy Resources LLC (ATN.N: Quote, Profile, Research, Stock Buzz), UDR Inc UDR.N and Lender Processing Services (LPS.N: Quote, Profile, Research, Stock Buzz).
- No companies were removed from the list, which now expands to 299 for the NYSE. It was initiated by the U.S. Securities and Exchange Commission as an attempt to crack down on short-selling and calm the turmoil in global markets, which led to wild price swings in the stocks of major financial firms.
- Short-sellers borrow shares they consider overvalued and sell them. If the price drops, they repurchase the shares, return them and pocket the difference. (Reporting by Christopher Kaufman; Editing by Lisa Von Ahn)
- Names added to the SEC NYSE Short Sale Prohibition List: FUR, LPS, CVS, UDR, SLG, KRG, WSH, ATN, and MVC.
This is getting interesting because:
- ATN is a US natural gas producer that has nothing to do with the financial sector.
- CVS is a pharmacist
Both companies are not excessively shorted (far from it), so we are a little in the dark about their inclusion on the list. When we find out more, we will report.