California Utilities Aside, NYSE ‘Short’ Selling Falls

“Short” selling of New York Stock Exchange stocks fell slightly in the last month, a sign that investors may be hesitant to ramp up their bearish bets at a time when some sectors of the market are rebounding.

As of Jan. 12, 4.728 billion NYSE shares had been sold short and not yet bought back, the exchange said Friday. That was down 3% from the total as of Dec. 15. The drop snapped a four-month string of record highs in NYSE short selling.

However, short selling of California’s two troubled utilities jumped dramatically. Short positions on Edison International (ticker symbol: EIX) shares surged 54% to more than 6 million shares, while short interest in PG&E; Corp. (PCG) rocketed 93% to 4.2 million shares.

In a short sale, an investor borrows stock from a brokerage and sells it. The bet is that the market price will drop, allowing the investor to repay the borrowed stock with new shares purchased at a lower price.

Though technology stocks such as IBM (IBM), Hewlett-Packard (HWP) and AOL Time Warner (AOL) trade on the NYSE, it has far fewer tech stocks than the Nasdaq Stock Market and has been far less volatile. While Nasdaq skidded more than 39% last year, the NYSE composite index eked out a 1% gain. So far this year, the NYSE index is down 1.6%, while Nasdaq has jumped 12%.