This Day In Market History: NYSE Starts Disclosing Short Sales

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened?

On this day 87 years ago, the New York Stock Exchange began regularly reporting short selling data for the first time.

Where The Market Was

The Dow finished the day at 132.87. The S&P 500 traded at around 13.80. Today, the Dow is trading at 24,811.76 and the S&P 500 is trading at 2,727.76.

What Else Was Going On In The World?

In 1931, the Empire State Building opened its doors in New York, and unemployment in the U.S. doubled to 16.3 percent as the Great Depression set in. A loaf of bread cost 8 cents.

Short Sellers Come Out Of The Shadows

The Dow dropped 32.6 percent in 1930 as the American economy took a nosedive, but short sellers in the stock market made a killing. Short sellers took a lot of heat for the stock market crash of 1929, which led to the enactment of the uptick rule shortly thereafter. The uptick rule requires short selling orders to be filled only during upticks in share prices and is meant to mitigate the negative impact of short sales. The uptick rule was abolished in 2007 just prior to the market crash of 2008.

In May 1931, the NYSE made the decision to regularly disclose short sale data for the first time so traders could know just how much money was being bet against the market.

Today, traders routinely use short-selling-related metrics such as short volume, short interest, utilization rate and short percent of float to help inform trading decisions.

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Photo by Thomas J. O'Halloran via the Library of Congress. 

Swiss National Bank Has $9.07 Million Position in MEDNAX Inc (MD)

Swiss National Bank boosted its stake in shares of MEDNAX Inc (NYSE:MD) by 2.3% during the 1st quarter, HoldingsChannel reports. The firm owned 163,000 shares of the company’s stock after buying an additional 3,600 shares during the quarter. Swiss National Bank’s holdings in MEDNAX were worth $9,068,000 as of its most recent filing with the SEC.

A number of other hedge funds and other institutional investors also recently added to or reduced their stakes in the stock. Delta Capital Management LLC bought a new stake in MEDNAX during the fourth quarter valued at about $227,000. Brown Advisory Inc. bought a new stake in MEDNAX during the fourth quarter valued at about $231,000. Shelton Capital Management bought a new stake in MEDNAX during the fourth quarter valued at about $245,000. Macquarie Group Ltd. raised its holdings in MEDNAX by 36.1% during the fourth quarter. Macquarie Group Ltd. now owns 4,900 shares of the company’s stock valued at $262,000 after acquiring an additional 1,300 shares during the period. Finally, Brandes Investment Partners LP bought a new stake in MEDNAX during the fourth quarter valued at about $324,000. Institutional investors own 97.14% of the company’s stock.

Get MEDNAX alerts:

Shares of MEDNAX opened at $46.79 on Friday, according to Marketbeat. The company has a current ratio of 1.74, a quick ratio of 1.74 and a debt-to-equity ratio of 0.63. MEDNAX Inc has a 1-year low of $40.56 and a 1-year high of $63.04. The company has a market cap of $4.42 billion, a price-to-earnings ratio of 14.85, a P/E/G ratio of 1.19 and a beta of 0.26.

MEDNAX (NYSE:MD) last issued its quarterly earnings data on Monday, April 30th. The company reported $0.89 earnings per share for the quarter, topping the Thomson Reuters’ consensus estimate of $0.82 by $0.07. MEDNAX had a return on equity of 10.13% and a net margin of 9.34%. The company had revenue of $901.90 million for the quarter, compared to analysts’ expectations of $903.75 million. During the same period in the previous year, the firm posted $0.75 earnings per share. The firm’s revenue for the quarter was up 7.9% on a year-over-year basis. analysts predict that MEDNAX Inc will post 3.94 EPS for the current fiscal year.

In other MEDNAX news, insider John C. Pepia sold 3,000 shares of the business’s stock in a transaction that occurred on Tuesday, May 22nd. The stock was sold at an average price of $46.43, for a total transaction of $139,290.00. Following the sale, the insider now directly owns 39,716 shares of the company’s stock, valued at $1,844,013.88. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this hyperlink. Insiders own 2.40% of the company’s stock.

A number of research firms have commented on MD. TheStreet raised MEDNAX from a “c+” rating to a “b” rating in a report on Monday, March 12th. ValuEngine cut MEDNAX from a “sell” rating to a “strong sell” rating in a report on Wednesday, May 2nd. Stephens set a $62.00 target price on MEDNAX and gave the stock a “buy” rating in a report on Thursday, February 8th. JPMorgan Chase & Co. lifted their target price on MEDNAX from $46.00 to $55.00 and gave the stock a “neutral” rating in a report on Monday, February 12th. Finally, Zacks Investment Research cut MEDNAX from a “hold” rating to a “sell” rating in a report on Wednesday, April 11th. Two investment analysts have rated the stock with a sell rating, ten have given a hold rating and three have assigned a buy rating to the stock. The stock currently has a consensus rating of “Hold” and an average price target of $55.92.

About MEDNAX

MEDNAX, Inc, together with its subsidiaries, provides newborn, anesthesia, maternal-fetal, radiology, pediatric cardiology, and other pediatric subspecialties physician services in the United States and Puerto Rico. It offers neonatal care services, such as clinical care to babies born prematurely or with complications within specific units at hospitals through neonatal physician subspecialists, neonatal nurse practitioners, and other pediatric clinicians; anesthesia and anesthesia subspecialty care; and acute and chronic pain management services.

Want to see what other hedge funds are holding MD? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for MEDNAX Inc (NYSE:MD).

AI Challenging Bank Lending Practices

&l;p&g;&l;img class=&q;dam-image shutterstock size-large wp-image-1093777685&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1093777685/960x0.jpg?fit=scale&q; data-height=&q;720&q; data-width=&q;960&q;&g; Shutterstock

Artificial Intelligence may be pushing the limits of decision making. Banks that want to use AI still have to adhere to several industry specific rules primarily around transparency. Other industries like tech don&a;rsquo;t have the same hurdles to climb when it comes to regulation around there AI efforts. Rules for banks were put in place to protect poor and minority consumers, including laws which are supposed to ensure the equal treatment of customers. Are black people going to fall further behind in getting approved for loans and credit cards if banks start using AI for lending decisions?

&l;b&g;The Breakdown You Need to Know&l;/b&g;

&l;span style=&q;font-weight: 400;&q;&g;Trying to interpret the mystery behind why deep learning decisions are made has proven to be quite difficult. AI already has a history of bias against minorities and if you add in how underbanked black communities are, putting this combination together could present major problems. There are laws like the Equal Credit Opportunity Act, &a;nbsp;which states banks have to prove they&a;rsquo;re not discriminating based on traits like gender or race. If banks let an AI system make a judgment about customer needs without being able to explain how it made the decision, inherent bias will control financial lending decisions. &a;ldquo;We want to understand how the decision is made, so that we can stand behind it and say that we&a;rsquo;re not disfavoring someone,&a;rdquo; said Hari Gopalkrishnan, client-facing platforms technology executive at Bank of America during its tech summit.&l;/span&g;

&l;a href=&q;https://www.culturebanx.com&q; target=&q;_blank&q;&g;CultureBanx&l;/a&g; notes AI platforms taking over bank lending decisions could put black family wealth further behind. The latest figures from the U.S. Census Bureau show the median net worth for an African American family is $9,000, compared with $132,000 for a white family. Latino families did not fare much better at $12,000. In 2016, 20.9% of black borrowers and 15.5% of hispanic borrowers were rejected for a loan, along with 8.1% of white applicants and 10.4% of Asian applicants, according to a report from Zillow. The gap is significant because owning a home can help most people, regardless of race, accumulate assets to boost their net worth.

What is deep learning technology? Let&a;rsquo;s start with the tools used for deep learning, which include neural software networks whose structure roughly tries to simulate the human brain&a;rsquo;s operations. These systems create outcomes with unprecedented accuracy and speed. However, the main issue here not always clear how the dense web of computations reaches a specific decision.

&l;b&g;AI Lending Mindfulness&l;/b&g;

&l;span style=&q;font-weight: 400;&q;&g;Banks in the past have argued they find themselves in a bind when staring down potentially conflicting government mandates to reduce balance sheet risk, while not discriminating against any one demographic group. As financial institutions dive further into deep learning technology, Bank of America and Capital One have AI researchers working on how to make the opaque technology transparent enough for wider use.&l;/span&g;&l;/p&g;

Wall Street Baffled Why Activist Sarissa Went Silent on Ironwood

Ironwood Pharmaceuticals Inc. activist investor Alex Denner helped send shares higher by almost a third since announcing his intention last month to join the board. But it’s been crickets lately, with hardly a peep from his hedge fund.

The drugmaker is less than two weeks from its highly anticipated annual meeting and Sarissa Capital Management has yet to file a final proxy soliciting shareholder votes for Denner’s nomination. The fund holds a 2.4 percent stake in the Cambridge, Massachusetts-based company.

"My sense of it is: A lot is going on behind the scenes," Berenberg’s Patrick Trucchio said, adding that the delay "seems odd." The agency representing Sarissa, D.F. King & Co., expects a definitive proxy to be filed, writes Trucchio, who has a buy rating on the stock and a Street-high price target.

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Sarissa did not return calls seeking comment and Ironwood declined to comment. As the May 31 annual meeting looms, Ironwood is urging shareholders to vote for existing directors Lawrence Olanoff, Amy Schulman and Douglas Williams. Denner wouldn’t add any expertise, the pharmaceutical company argues.

Proxy adviser Glass Lewis urges holders to vote for the company’s nominees, noting that "Sarissa has not publicly disclosed how it intends to proceed with respect to the 2018 annual meeting." ISS reserved judgement on Denner due to the absence of a proxy filing, and recommends two of the three company nominees.

The fund’s involvement is widely perceived to have prodded the company to consider spinning off its R&D arm, notes Credit Suisse analyst Vamil Divan. "It’s a little bit unusual that we’re getting close to the date and we haven’t heard more from him," Divan said. But "I don’t downplay his intentions."

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