If you trade stock in a brokerage account, the account is allowed to lend YOUR stock to a short without asking your permission. If you read the fine print when you open your account, you basically authorize the brokerage to lend your stock as they see fit. And you will not be consulted, nor do you receive a part of the commission or interest that is payable on the transaction. Hedge funds are the big culprit on most short sales, but there is a smaller retail component that anyone with a margin account can play. It is risky as hell, but lucrative for those who know the game. And I do think most of the idiots on public forums are just bashers that are trying to pry loose weak shareholders. It is a dishonorable way to make a living as far as I am concerned.

I look at the outstanding short position when I am doing my DD on a new stock. It is a contrarian indicator, since any shares that appear on that report have already been sold, and therefore outstanding shorts represent a commitment to buy, since all short positions must eventually be covered. When you have a huge short position, it is sometimes an indication that a company is in trouble, or it may mean that a placement is coming and someone got advance notice, since most equity offerrings are priced at a discount to market. One can short the hell out of a stock, and then buy the cheap shares in a placement to cover, and keep the difference.

I do not think the O/S short on KXL is a big deal. It is a small percentage of the float, and as someone else has already pointed out, KXL is an easy target since it had a sharp run recently. For the same reason I have a cheap bid in right now, other people will short the stock, expecting that some form of retracement is due and that the stock will dip at least temporarily.

For personal disclosure, I have never shorted a stock, although I do have a margin account and could do so anytime.

cheers!

mike