By PETER KENNEDY 


Tuesday, November 26, 2002 – Print Edition, Page B18

VANCOUVER -- Short sellers were sent running for cover yesterday after positive news from customers of fuel cell maker Ballard Power Systems Inc. sent the company's stock price rising 14 per cent.

Analysts said the stock rose $3.04 to $24.74 on the Toronto Stock Exchange after DaimlerChrysler AG demonstrated its Mercedes Benz A-class fuel cell car at the auto maker's first-ever North American innovation symposium in New York. Dubbed the F-Cell, it marks DaimlerChrysler's transition out of the experimental stage for fuel cell vehicles and into commercial prototypes.

The stock, which rose $1.89 (U.S.) to $15.69 on the Nasdaq Stock Market, was also driven by news of a $1.88-million order from a new but unnamed automotive customer for Ballard's fuel cell engine and support services.

These announcements, and the prospect of more next week when Toyota Motor Corp. and Honda Motor Co. Ltd. are scheduled to sign fuel-cell-vehicle leasing agreements in California, have come at a time when sentiment toward so-called concept stocks appears to be improving.

"When their customers are speaking [about fuel cell cars], it is always a good sign," said Jarett Carson, an energy and power technology analyst with RBC Dominion Securities Inc. in Austin, Tex. "It provides a certain level of credence and conviction that we haven't seen for a while," he said.

Burnaby, B.C.-based Ballard is the world's leading developer of fuel cells, which generate electricity by combining oxygen and hydrogen, and are widely seen as an environmentally friendly alternative to the internal-combustion engine.

The company is working in partnership with firms such as Ford Motor Co. and DaimlerChrysler in developing fuel cells for use not only in cars and buses, but in stationary power plants and in the home.

However, analysts say the stock had become an easy target for short sellers because of the widespread view that the company was quickly burning up its cash. (A short sale occurs when the seller borrows stock from a brokerage, and sells it, expecting the price to fall. If it does, the seller will buy stock at the lower price to replace the stock that was borrowed.)

According to Bloomberg News, 11.3 million shares -- or about 18 per cent of the outstanding shares that are not held by management and Ballard's joint venture partners -- have been sold short on Nasdaq.

Following yesterday's rise, which has sent the stock up from a low of $6.66 on Nasdaq in early October, short sellers have been forced to cover their positions by buying their way out at whatever price the market demands.

"A number of people have been caught short in a period of heightened media interest," says RBC's Mr. Carson, who has set a target of $21 for the stock.

However, others are more cautious. Andrew Bradford, an analyst with Raymond James & Associates in Calgary, said that Ballard has a market capitalization of $2.6-billion (Canadian).

"That's a very high market value in relation to the opportunities that Ballard has in front of it," said Mr. Bradford, who rates the stock an "underperform" with a target of $8.50.