Topic: How To Invest

Pat: I would appreciate your view on two companies you recommend whose short positions have increased lately: Great West Lifeco and Imperial Oil.

Article Excerpt

A high short position is no longer a particularly telling indicator, since traders and hedge funds often combine a short sale with some other transaction in stock options. Rather than having to buy the stock back in the market, for instance, short sellers may hold call options that they can exercise; that way, they buy the stock from the option seller. The short sale may say more about options trading than it does about the company’s fundamentals. Stocks like Great-West Lifeco, $23.75, symbol GWO on Toronto (Shares outstanding: 944.7 million; Market cap: $22.4 billion), and Imperial Oil, $40.84, symbol IMO on Toronto (Shares outstanding: 847.6 million; Market cap: $34.6 billion), are bound to have high short positions; they are highly liquid stocks, and there are plenty of shares available to borrow from the many institutions that own them. Great-West Lifeco and Imperial Oil are buys. …