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U.S. biotech stocks may fall further as short interest rises

Street signs for Wall St. and Broad St. hang at the corner outside the New York Stock ExchangeA 4 percent decline in biotechnology stocks on Wednesday sent the Nasdaq Composite Index to its largest one-day loss in nearly a year, and some investors are betting that the once-hot sector has further to fall. Short interest has risen in a number of biotech names perceived as vulnerable to a selloff after a rally that has sent the Nasdaq Biotechnology Index up 42 percent over the last year even after this week's declines. Overall, a screen of about 1,650 mid-cap U.S. companies shows biotech stocks, on average, have a short interest ratio of about 11.6 percent, compared with the average mid-cap name's 6.4 percent in short interest, according to Starmine, a Thomson Reuters company. Fund managers now have an average of 4.1 percent of their portfolios in biotechnology companies, nearly double the level of three years ago, according to Lipper data.


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