Short Stocks List
On average, how does a stock perform after the 10 days from being placed on the regulation sho list?
I expected a short squeeze as a result of a stock being placed on the Regulation SHO list, but the price is dropping. Any thoughts?
If the short position is large, it is because a lot of people feel that the stock is overvalued. Short squeezes were popular back in the days when you could manipulate stock prices. It is a lot harder to do now. No one wants to squeeze the shorts and then end up owning lots of shares of an overvalued company.
Asquith and Meulbroek (1996) wrote an academic article that shows that stock performance is indirectly related to the level of shares that are shorted. On average, the more shares that are shorted, the worse the company will do.
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