* Short interest was 30.8 pct of float in mid-May
* Would take 9.97 days to cover short positions
(Adds company comment, background, analyst comment, byline)
By Nichola Groom
LOS ANGELES, June 9 Short interest in First
Solar Inc (FSLR.O) rose to 37.4 percent of the company's free
float as of May 31, according to Nasdaq data released on
The company's short interest had been 30.8 percent of the
float as of May 13.
The solar sector -- and First Solar in particular -- has
been a target for short sellers, who benefit as a stock
declines. They borrow shares and sell them with the expectation
of buying them, or covering their shorts, at a lower price
On May 25, famed short seller James Chanos said he is
betting that shares in First Solar will fall, in part because
solar power is still too expensive to compete with traditional
sources of electricity generation. He also said Chinese
competitors are increasing capacity and cutting costs so
rapidly that profits across the industry are suffering
A First Solar spokesman had no comment on the Nasdaq data.
First Solar shares closed at $114.06 on Thursday. They have
fallen about 35 percent since hitting a 2011 high of $175.45 in
February, and one analyst said some investors are getting more
cautious on shorting the solar sector.
"The borrow on solar stocks has become more difficult,
although not impossible," said Mizuho Securities USA analyst
Paul Clegg. "When you've had this much of a downdraft -- and
there has been a more than 30 percent correction in solar since
January -- it becomes increasingly difficult to think of new
reasons why the stock should go down."
Clegg has an "outperform" rating on First Solar.
The number of shares of First Solar held in short positions
rose 21.38 percent to 21,237,997 as of May 31 from 17,496,566
as of May 13. As of April 30, the company had 56.74 million
shares in its free float.
It would take 9.97 days to cover the short positions in
First Solar shares, based on the stock's average daily volume.
That's up from 7.39 days in the prior period.
(Additional reporting by Matt Daily in New York)
(Reporting by Nichola Groom; Editing by Gary Hill)