10 Stocks Under Attack

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 Nasdaq 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.

Company

Shares Short, Oct. 15

Shares Short, Sept. 30

% Change

CAPS Rating (out of 5)

SunPower (Nasdaq: SPWRB  )

2.2

0.9

155.28%

***

EXACT Sciences (Nasdaq: EXAS  )

1.0

0.6

69.07%

*****

FLIR Systems (Nasdaq: FLIR  )

9.5

5.7

64.84%

****

Foster Wheeler (Nasdaq: FWLT  )

5.0

3.3

52.65%

*****

Mannatech (Nasdaq: MTEX  )

4.3

2.8

51.93%

**

Acergy (Nasdaq: ACGY  )

1.8

1.2

50.93%

****

Constar International

0.8

0.5

46.34%

NR

CardioNet

1.3

0.9

46.18%

***

Partner Communications (Nasdaq: PTNR  )

1.1

0.8

45.93%

****

Source: wsj.com. 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 120,000-strong CAPS community offers a good place to start.

The short list
Say what you will about Mannatech's business structure -- and many investors do, looking askance at its multi-level marketing setup -- the company also has its legions of fans and a line of products it's willing to go to the mat for. It recently won a patent infringement case against a competitor. The judge not only issued a judgment in the company's favor, but also ordered the competitor's products delivered to Mannatech for destruction and awarded more than $770,000 in attorney's fees. Not that it makes up for the $11 million class action settlement the company made earlier this year, but CAPS member EVB4U figured back in August that the new management team would make a change for the better:

New CEO with global market experience in Billion Dollar Industry. Will bring that experience to a fairly new market to a company positioned to explode in its industry. The new CEO is not afraid to cut costs to benefit its shareholders and associates. Winner of a patent lawsuit against other company that will bring fear those attempting to do the same. Company resilience through lawsuits with no wrongdoing.... I see Mannatech at the forefront in its class of wellness and business opportunity.

Foster Wheeler provides construction and engineering services for the oil and gas industry. It has seen its stock price slide right along with the price of oil. But with interest rates getting cut to boost the economy, CAPS member SolarInvestor sees its recent low price as an inflection point that will also benefit from demand for new oil drilling:

This is at its 52 week low with high at $171. With both Presidential candidates calling for increase in drilling, plus the #2 topic on everyone's agenda being energy and infrastructure, this company seems to be poised to bounce back.

Acergy is another oil services firm being priced by the market as if there will never be another drop of oil extracted from the ground, or the ocean floors, where it has developed its expertise. GoNuke thinks its technological advantage provides them with a barrier to entry:

Acergy has the kind of skill and technology that is very difficult to accumulate. It's business is healthy and its customers are wealthy cash rich oil companies. The current P/E suggests that the market thinks the company is dying. Comments abound regarding political resistance to drilling in coastal waters but this company's expertise is in bringing home oil from deep sea wells that are often far from shore.

You can read the full pitch, which discusses the implications of falling prices on oil-rich countries like Russia in relation to continuing demand in places like China and India, by going to Acergy's CAPS page.

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!

Partner Communications is a Motley Fool Income Investor pick. 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 here. There's no shortcut around the Motley Fool's disclosure policy.


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