Short Sellers Show No Faith In Yahoo!

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The short interest in Yahoo! (YHOO) for January rose almost six million shares to 84.1 million. That’s a not insignificant bet that the stock may drop.

Yahoo!’s new Panama advertising system will be out early, and the internet portal can offer a better alternative to its larger rival Google. Yahoo!’s comments about the release of the new service drove its stock up when the company announced Q4 06 earnings.

But, skeptics still think that Google’s (GOOG) hold on the text ad market may be too hard to break. IF there are any early indications in February or March that the Yahoo! program is not being well received, the stock could take a nasty tumble.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.