One-in-Eleven “Free” Schering Common Shares: Now “Shorted” — Pre-Sold!

More importantly, that’s about triple its near-peers.

Methodology: As of mid-November 2008, about 83 percent of Schering-Plough’s common stock was institutionally-held (this is a very stable figure). These shares rarely change hands, except in large, off-exchange, block transactions — so the actually-liquid, free-floating number of shares of common stock of Schering Plough are the inverse proportion of this number, or about 16 percent of the 1.61 billion total “floated” Schering shares outstanding.

That figure, then, is about 258 million shares “on the loose” — over the NYSE, and to a lesser extent, the various international exchanges.

Of those, fully 23 million Schering shares are shorted — and that is just about level with the October 2008 shares-shorted figure — which came in just over 23 million shares. See this Yahoo! stock summary chart, for that back-up detail. So, 23/258 equals a ratio of about 9 percent “free-shares-shorted“.

This ratio is vastly out-of-whack — especially compared to all other pharma companies in Schering’s peer group. The analogous free-to-short ratios for Pfizer, Merck and Johnson and Johnson are 2.6 percent, 3 percent and 2.1 percent, respectively. Schering? More than triple these.

And so, I would suggest that the overall market “knows” something not reflected in Schering’s recent rise from around $14, to a little over $16, in a shortened NYSE session, of yesterday.

That something is not going to be good, post December 31, 2008.