BlackBerry targeted by short sellers as market awaits results

Wed Mar 27, 2013 12:15am EDT
 
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By Euan Rocha

TORONTO (Reuters) - BlackBerry's BB.TO BBRY.O share price has more than doubled over the last six months as buzz around its new smartphones has boosted investor confidence, but some traders are betting big that talk of a turnaround is over-hyped.

Nasdaq data released on Tuesday shows that short interest in the stock is at record levels and has more than doubled over the course of the last year.

With BlackBerry due to report quarterly results in two days, giving investors their first official clues on demand for its new Z10 touchscreen device, that buildup of bearish bets could send the stock price surging if the company delivers a positive surprise.

BlackBerry, a one-time pioneer in the smartphone market, hopes the device - powered by its new BlackBerry 10 operating system - and other devices soon to follow will turn its fortunes around and help it to win back market share in an ultra-competitive sector. But many traders are clearly unconvinced.

Short interest in BlackBerry's Nasdaq-listed stock has risen to more than 155 million shares, up from 136.5 million shares a month ago and 60 million at this time last year.

Traders who sell securities "short" borrow shares and then sell them in the hope that the price will fall, so they can buy them back more cheaply, return them to the lender and pocket the difference.

Markit, a financial information services company, said in a report last week that positive reviews around the Z10 have thus far failed to impress short sellers, with demand to borrow shares in BlackBerry hovering at record levels.

The firm, which collects data from custodian banks that run lending programs on behalf of investors who sometimes put their holdings into such programs, notes that roughly three-quarters of the BlackBerry shares that can be borrowed are already out on loan, meaning that it would be difficult and expensive to short any more of the company's shares at this time.   Continued...

 
A new Blackberry Z10 smartphone is displayed at a store in New York, March 22, 2013. REUTERS/Brendan McDermid