From the 2/18 GameStop hearing:

Rep. Andy Barr: (02:01:32) [...] But Melvin lost $6 billion in 20 trading days. Let me ask you about your risk management. Did your short positions exceed float?

What exactly does "Did your short positions exceed float" mean here?

3 Answers 3


It may be a gotcha question. 140% of GameStop float had been sold short. Rep. Barr seems to be asking if Melvin Capital by itself had shorted more than 100% of the float. That's very unlikely, but Rep. Barr is either confused or he's trying to get an admission of the illegal practice of naked short-selling.

However you ask it, Melvin Capital's answer is going to be "we don't break the law, and none of our short positions were naked."

Rehypothecation is a way that more than 100% of float can be sold short; no one is keeping track of how many times a particular share is lent out to short-sellers, sold, and then lent out and sold again.

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    It's likely that there was naked shorting in GameStop but your conclusion is wrong that if 130% of GameStop float had been sold short. That means someone was naked... Shares outstanding exceeds the float and if institutional lenders loan shares, it's legitimately possible that the Short % of Float could legally exceed100% Commented Feb 20, 2021 at 17:53
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    Thanks, changed my answer. Commented Feb 21, 2021 at 5:42

The short positions are the shares that someone has borrowed, and then sold, in the hope that they can buy them back for less at a later date.

The float is the number of shares in a company that are available to be bought and sold.

If the short position exceeds the float, then the short sellers are likely to have trouble buying enough shares back again.


What exactly does "Did your short positions exceed float" mean here?

The float is total amount of shares outstanding less the amount of shares held by institutions. Since some institutions lend shares, it's possible for the Short % of Float to exceed 100%.

There has also been discussion here that shares can be loaned multiple times though there has been no citation presented verifying this or refuting it. If shares can indeed be loaned out multiple times then it's theoretically possible that the Short % of Shares Outstanding could exceed 100%.

Rep. Andy Barr: ... Did your short positions exceed float?

It makes me wonder if this question was merely to determine the degree of risk that Melvin Capital took on or whether Barr does not understand the stats of shorting.

And if there is any illegal shorting, it inflates the short percentage stats.

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    From my understanding, float is shares outstanding minus shares held by insiders, or shares under some kind of restriction from being sold freely in the market. An example of a restriction is shares that are in lockup period after an IPO. Institutional owned shares are part of the float, assuming institutions can freely sell their shares without restriction at any time. Commented Feb 21, 2021 at 0:06
  • There's been a lot of discussion here about this vis a vis GME and not a lot of resolution of differences. I'll take your word for it because I can't make sense of some of the numbers. For example, Yahoo says that the % of shares "Held by Institutions" is 122.04%. 122.04% of the float? How does that compute? Is that because synthetic shares created from shorting inflates the number over 100%? Is it bad data? Just asking, not knowing ... :->) Commented Feb 21, 2021 at 0:58
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    I read that you can create synthetic shares by exercising option contracts early. That mechanism still requires a counterparty at a brokerage, though. Another more believable mechanism is the very large number of “failure to drliver” shares during a transaction., which is a primary focus of this GME investigation Commented Feb 21, 2021 at 1:09
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    The congressional hearing was fun to watch. I can see how it would be very confusing because most congressmen had no clue what they were asking about. For me it was comical. Commented Feb 21, 2021 at 1:12
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    Exercise of long calls creates synthetic shares if the counterparty does not own the shares for delivery. Then, the shares must be borrowable for this to be legit. Commented Feb 21, 2021 at 1:28

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