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Since everyone loves a winner, 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 potential profits.

However, with the SEC's ban on shorting fading to a memory, let's look at companies on the New York Stock Exchange with the largest increase in the number of shares sold short. Combining that with the collective intelligence of Motley Fool CAPS, we'll see which of these companies Fools believe have the power to make short work of short-sellers.


Shares Short-Oct. 15

Shares Short-Sept. 30

% Change

CAPS Rating (out of 5)

Aflac (NYSE: AFL  )





Petrobras (NYSE: PBR  )










J.M. Smucker (NYSE: SJM  )










RSC Holdings










Mitsubishi UFJ (NYSE: MTU  )





Dr Pepper Snapple










Sources: Share counts in millions.

Of course, this isn't a list of stocks to buy -- or short! These stocks could have serious problems that warranted their short interest, but they might also be stricken by short-term troubles. Only Foolish due diligence will tell you for certain; our 120,000-strong CAPS community offers just such a good place to start.

The short list
With large exposures to Lehman Brothers and Washington Mutual, as well as three of Iceland's largest banks -- all of which failed last week and had to be taken over by that country's government -- Aflac's earnings report last week wasn't all that ducky. Still, CAPS member PrincetonAl felt the underlying business of the insurer was sound, which was supported by Aflac's raising guidance slightly for the rest of the year.

Beaten down with rest of financials, but bulk of business is in Japan not recession related. While they have a correlation with unemployment in terms of insurable rolls in US, don't think that the movement is in line with the underlying fundamentals.

Despite potential evidence of bid rigging that occurred in the late 1990s and into the early part of this decade, KBR was still able to secure a $197 million Army Corps of Engineers contract. The engineering, construction, and services company has been under investigation for a number of years now, and was recently spun off by parent Halliburton (NYSE: HAL  ) last year. Despite the controversy, CAPS member samchild7 finds KBR to be in an enviable position.

Enviable market positioning, free of Halliburton overhang, recession-resistant markets, energy focus and future significant role in alternative energy infrastructure, ridiculously low market cap versus book value.

They had us going there for awhile, didn't they? "They" being Mitsubishi UFJ and its $9 billion cash injection into Morgan Stanley (NYSE: MS  ) . As the day of the deal loomed closer and Morgan Stanley's stock dropped lower, concern over whether the Japanese bank would actually follow through on its offer caused all kinds of mayhem in the market -- despite assurances from both parties that the deal was still on. Ultimately, Mitsubishi got even better terms and some additional preferred stock for its effort in keeping the investment firm afloat. Appropriately enough, CAPS member japanbull last month saw the bank getting ready to take off with Japan's economy.

Japan Bull Market Checklist
Strong Currency...check
Low Exposure to Sub-Prime...check
High savings rate..check
Banks flushed with cash..check
Ability to buy distressed U.S assets..check
Deflationary economy showing sings of ending...check
Japan market ready for takeoff!!

Don't sell yourself short
It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Then 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!

Petroleo Brasileiro is a Motley Fool Income Investor pick. Aflac is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. There's no shortcut around The Motley Fool's disclosure policy.

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Related Tickers

10/25/2016 4:02 PM
AFL $69.64 Down -0.38 -0.54%
Aflac CAPS Rating: *****
MTU $5.07 Up +0.05 +1.00%
Mitsubishi UFJ Fin… CAPS Rating: **
PBR $12.18 Down -0.23 -1.85%
Petroleo Brasileir… CAPS Rating: **
HAL $47.77 Down -0.47 -0.97%
Halliburton CAPS Rating: ****
KBR $14.51 Down -0.32 -2.16%
KBR CAPS Rating: *****
MS $33.35 Down -0.03 -0.09%
Morgan Stanley CAPS Rating: ****
SJM $130.19 Up +0.30 +0.23%
J.M. Smucker CAPS Rating: *****