Since everyone loves a winner, it's reasonable to assume that everyone hates a loser -- everyone but short sellers, at least. These contrarian investors have bet that hot stocks are primed to fall and are aiming to turn their pessimism into potential profits.
This week, let's look at companies on the New York Stock Exchange with the largest decrease in the number of shares short. Combining that with the collective intelligence of Motley Fool CAPS, we'll see which of these companies Fools believe have the power to continue to make short work of short sellers.
|
Company |
Shares Short, May 15 |
Shares Short, April 30 |
% Change |
|
|---|---|---|---|---|
|
Yahoo! |
47.3 |
38.0 |
24.65% |
** |
|
Juniper Networks |
34.6 |
26.9 |
28.78% |
*** |
|
E-Trade Financial |
111.4 |
104.5 |
6.58% |
*** |
|
Comcast |
66.8 |
60.7 |
10.02% |
** |
|
Intel |
50.8 |
44.9 |
12.96% |
**** |
|
Staples |
20.5 |
16.3 |
25.55% |
**** |
|
Marvell Technology |
25.9 |
21.7 |
19.19% |
**** |
|
Starent Networks |
10.1 |
6.1 |
64.65% |
*** |
|
Fifth Third Bancorp |
32.2 |
28.6 |
12.78% |
* |
Shares-short data courtesy of wsj.com. CAPS Rating courtesy of Motley Fool CAPS. Share counts in millions.
Of course, this isn't a list of stocks to buy -- or short! These stocks could have serious problems that warrant their short interest, but they might also be stricken by short-term troubles. Only Foolish due diligence will tell you for certain; our 105,000-strong CAPS community just offers a good place to start. Yet investors seem to like three of these companies, as their four-star CAPS ratings suggest.
A not-so-easy merger
Although office supply industry leader Staples hasn't yet regained the highs it achieved back in early 2007, it has recovered much of the ground it lost and is within striking distance of those levels again. Capturing the prize of delivery rival Corporate Express would perhaps seal the deal and make both OfficeMax and Office Depot even weaker threats than they currently are.
Total sales grew 6% in the latest quarter for the Motley Fool Stock Advisor recommendation, but comps were hurt by a like amount, and margins were slightly compressed as the company took it on the chin in most of its business lines, except for ink and toner. Yet as the rate of decline in same-store sales has flattened, management hopes that the company is bumping along the bottom and that business will rebound from here. Since the North American market has been its weakest while delivery and international operations have been strong, the desired Corporate Express acquisition could help bolster its efforts. Only thing is, Corporate Express isn't making things easy for the office-supplies retailer. It opposes Staples' bid as too low and has made a pitch for French company Lyreco in an attempt to thwart Staples' advances.
It's now up to shareholders of the Netherlands-based Corporate Express to determine whether they want the "bird in the hand" sure thing of the 8 euros per share Staples has offered them, or the "two in the bush" synergies enhancement bid that the Lyreco acquisition would give them. Short sellers may be betting that the brash, cross-border, all-cash bid by Staples -- made using a weakened U.S. currency -- might not pass muster.
It even has some Staples bulls cautious. CAPS investor loosoo sees Staples as taking over the competitive space of its rivals, but with the pricing competition necessary to achieve the goal, this player still watching from the sidelines:
time for staples to replace office depot and office max. When something's been around too long and lost its [pizzazz], time to say goodbye. Staples is bigger store with much better lay out. Must keep prices competitive to succeed. Not sure yet if I would buy this stock -- will be watching it closely.
Speak up
You've heard from the CAPS community -- now it's your turn to have your say. Share your views with the CAPS community: Squeeze 'em till it hurts, or short 'em till the sun don't shine? May the best argument prevail!
