Nearly 20% of the S&P 500 Now Covered by No Short List
While the SEC's no short list was meant to protect financial stocks from excessive short selling, the current ban covers stocks comprising nearly 20% of the S&P 500's market capitalization, even though the Financial sector only makes up 15% of the index. As shown below, there are a handful of S&P 500 companies in the Financial sector (mostly REITs) that are not covered by the short sale rule. But there are also a number of non-Financial sector stocks that managed to lobby themselves onto the no short list, most notably GE and IBM. Why IBM, which is just slightly more than 10% off its 52-week high, felt the need to get on the list is up for debate. Our guess is they probably figured that if certain stocks can get special treatment, in the interest of their shareholders, why not them?
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Posted by: TheFinancialNinja | September 24, 2008 at 08:22 PM
when this comes off SnP will drop by 200 points
Posted by: dj | September 24, 2008 at 11:56 PM
IBM Capital, Inc. sells short term equity securites to money market funds. 20% or more of the S&P should be on the no-short list, because all of the major companies have financing groups that provide a ton of income to money market funds (AT&T, Coca-Cola, J&J, Procter & Gamble, Merck, etc). That's assuming the no-short list is actually a good idea.
Posted by: ScottyB | September 25, 2008 at 12:45 AM
Great post. Thanks for the analysis.
Posted by: Alan | September 25, 2008 at 06:40 AM