by Philip Baker
If all the short sellers in Myer – and there are a few of them out there as it's the most shorted stock in the sharemarket – want to buy back their position, it will take them 45 sessions to do it.
That's based on the average volumes the stock has traded on in the past, according to the Coppo Report (by Bell Potter's Richard Coppleson).
But the 10 per cent jump in the price of Myer shares on Friday – after some better-than-expected sales numbers – shows just how quickly short sellers can drive up the price when they get caught out.
Around 16 million shares changed hands by midday on Friday, the most in a single session since early June.
Myer has been the most shorted stock in the market for quite some time.
Around 17 per cent of the available stock has been short sold as investors bet the traditional department store owner will struggle to retain its relevancy and earnings amid tougher competition from online and international players.
But on Friday it was clear that chief executive Richard Umbers' turnaround strategy is gaining ground and the short sellers were scrambling to cover some of their positions.
This is the dark side of short selling – the "short squeeze".
When it plays out, traders on a desk are sometimes overheard saying they can actually smell the odour of burning flesh through the screen as the price skyrockets higher.
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