* Nasdaq data shows spike in short positions in BlackBerry
* Short positions have more than doubled from year-ago level
* BlackBerry to announce quarterly results on Thursday
* Any positive news on Z10 would raise odds of short squeeze
By Euan Rocha
TORONTO, March 26 BlackBerry's
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
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
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
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
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.
The number of short positions indicates that over 30 percent
of BlackBerry's free float is currently being shorted, up from
about 11 percent at this time last year.
The bearish data comes close on the heels of analysts' and
media reports that the Z10 device had a rather muted launch in
the United States last week.
SHORT SQUEEZE EYED
BlackBerry is hoping that the Z10 and other new devices
powered by its new operating system will help it to regain
ground ceded to rivals such as Apple Inc's iPhone, as
well as Samsung Electronics Co's Galaxy line and
other devices powered by Google Inc's market-leading
Android operating system.
BlackBerry's results this week will, however, only provide
investors with limited insight on demand for the Z10, which was
on sale during just the final month of the latest quarter. And
although the Z10 is now available in more than 25 countries, it
initially went on sale only in the United Kingdom and Canada.
BlackBerry's volatile stock is nevertheless likely to swing
wildly following the results on Thursday, as analysts and
investors read into the numbers and extrapolate broader sales
trends for the new device across the rest of the globe.
The company's stock, which closed at $14.46 on Tuesday on
the Nasdaq, has already dropped roughly 10 percent since Friday
after the reports of the Z10's lackluster U.S. launch.
The recent pullback in the stock ahead of results, however,
may not be all bad news for those investors hoping for a big
turnaround in the company's fortunes, as any positive outlook or
data points from the company on Thursday would raise the
prospects of a short squeeze in the stock.
In that scenario, bearish traders that sold the stock short
would be forced to buy shares to avoid big losses on their
positions - something that only serves to work against short
sellers and push a stock higher.
Eric Jackson, the founder and managing partner of Ironfire
Capital LLC, believes the size of the short position in the
stock may serve as a big catalyst for BlackBerry's share price,
if the company provides investors with an upbeat forecast.
"Even if they report a so-so quarter ... if they provide
robust guidance for the current quarter, that could really light
a fire under the stock," said Jackson, whose firm owns shares in