Chin Up in the Downswing


Chin Up in the Downswing: Buckle, American Public Education, Short Selling Uptick Rule

March 11, 2009 05:00 PM
by Anne Szustek
Among the latest positive financial headlines: clothing retailer Buckle and online education company American Public Education had positive numbers for Q4. Financial markets may get a boost if the uptick rule on short selling is reinstated.

Buckle: Setting Its Own Trend

Buckle reported an 18 percent year-on-year increase in fiscal net income for the fourth quarter of 2008. The retailer, which caters to the 12–24 age segment with such popular casual brand offerings as Lucky Brand and Dr. Martens, pulled in net income of $34.3 million, equal to $0.74 per share, for the three months ending on Jan. 31, up from $29.1 million, or $0.63 a share, the previous year. 

Strong Books for American Public Education

On Tuesday, online university corporation American Public Education reported a 70 percent year-on-year rise in fourth-quarter profits, up to $5 million from $3 million a year earlier. This was on the back of a 50 percent increase in registrations for American Public Education courses over the same period. 

Return of Uptick Rule on Short Selling Could Be Market Tonic

Also on Tuesday, House of Representatives Financial Services Chair Barney Frank, D-Mass., said that he believes that the uptick rule on short selling of stocks will be put back in place in roughly a month. The uptick rule prevents traders from short selling unless the sale price is higher than the previous sale price, helping to slow the stock’s decline. It was rolled back in 2007 by the Securities and Exchange Commission over concerns that changes in trading tactics had rendered it ineffective. After Frank’s comments, the S&P 500 rose more than five percent.
“If there's no uptick rule, the short selling can become overwhelming,” Bill Rhodes, founder and chief investment strategist at Rhodes Analytics in Boston, told Reuters. “When you get a tidal wave of pessimism, everybody wants to short, and what the uptick rule does is it creates a queue so you have to get in a line to do it.”

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