Short seller bet that Microsoft’s (MSFT) shares would fall adding almost six million shares to their position in January pushing total shares sold short to 108.5 million.
It may not have been a good move, although its is often tempting to short a stock at a multi-year high. On January 12, the stock broke $30 for the first time in several years. Earnings from the company were well received as Xbox and server sales drove strong results. With the new Vista OS coming to market, the early part of 2007 may be even better. The stock moved above $31, probably based on an anticipation that early sales of Vista may move the shares up further.
There has been no post earning let down in the stock price, and that may not be a good sign for the shorts betting the stock will move against its current trend.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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