Everyone loves a winner, so it's reasonable to assume that everyone hates a loser -- everyone but short sellers, at least. These contrarian investors bet that hot stocks are primed to fall, aiming to turn their pessimism into profits.
This week, let's look at companies on the Nasdaq 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 think have the power to continue to make short work of short sellers.
|
Company
|
Shares Short, May 30
|
Shares Short, May 15
|
% Change
|
Float
|
% of Float
|
CAPS Rating (of 5)
|
|
Sirius Satellite Radio (NASDAQ:SIRI)
|
141.3
|
170.4
|
(17.07%)
|
1370
|
10.31%
|
**
|
|
CNET Networks
|
14.5
|
26.3
|
(44.86%)
|
139.9
|
10.36%
|
****
|
|
Comcast (NASDAQ:CMCSA)
|
59.3
|
66.8
|
(11.30%)
|
2770.0
|
2.14%
|
**
|
|
Level 3 Communications (NASDAQ:LVLT)
|
231.8
|
238.9
|
(2.93%)
|
1500.0
|
15.46%
|
****
|
|
E*Trade Financial (NASDAQ:ETFC)
|
105.8
|
111.4
|
(5.03%)
|
464.5
|
22.78%
|
***
|
|
Dell (NASDAQ:DELL)
|
50.0
|
53.4
|
(6.46%)
|
1790.0
|
2.79%
|
**
|
|
RAM Energy Resources
|
0.4
|
3.7
|
(89.75%)
|
36.0
|
1.05%
|
****
|
|
JDS Uniphase (NASDAQ:JDSU)
|
24.4
|
27.7
|
(11.82%)
|
227.7
|
10.72%
|
**
|
|
Select Comfort
|
6.2
|
9.3
|
(32.72%)
|
40.0
|
15.60%
|
***
|
|
F5 Networks (NASDAQ:FFIV)
|
8.2
|
11.1
|
(26.21%)
|
81.3
|
10.03%
|
****
|
Sources: wsj.com, Yahoo! Finance, 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 110,000-strong CAPS community just offers a good place to start. Yet investors seem to like most of these companies, as evidenced by most having three- or four-star CAPS ratings.
A dollop of Dell
It must have been a mad scramble for the exits as shorts on computer maker Dell raced to cover their positions when earnings were reported last month. Dell had looked dull going into the announcement, but it surprised analysts with its scrappy attempt to regain market share first and let profits come back later.
CAPS investor blade5adj has made a smart, cogent analysis of Dell's situation, which in part lauds the company for going after energy efficiency. Read the full, thoughtful critique here, but for now, here's an excerpt:
They've also made an extremely large commitment to increasing efficiency and decreasing power consumption, which as it was featured in a recent Economist article, will become exceptionally important for consumers, especially those using servers. When you think about it, if you can purchase a product that will cut your energy consumption in half, you're drastically reducing your overhead. In such a capital intensive industry as servers, this is a huge chunk that you'd be adding back to your P/L statement.
Does he or doesn't he?
Well, if you're the FCC you still haven't. The merger of XM and Sirius continues to drag on, and while the agency's chairman has given his blessing, a decision by the full body has yet to be rendered. Sirius, in the meantime, continues to languish as a result, but the short interest may have seen the writing on the wall.
CAPS player raistlan01 also feels it's simply a matter of time now, and is waiting for Sirius' stock price to move higher on the news:
$2.25 are you kidding me. The Merger will be approved. This thing can't go any lower, and if it does it will come back up. THE ONLY REASON growth has slowed is because everyone is waiting for merger approval and interoperable radios. If I had sirius music and XM sports, I never ever would have canceled my sub. I only did to wait for the merger.
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!
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