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.

This week, we'll take a look at companies on the New York Stock Exchange with the largest proportion of their total share count 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. 31)	Shares Short (Oct. 15)	% Change	% Float	CAPS Rating (out of 5)
Banco Santander (NYSE: STD  )	8.7	2.1	322.20%	0.1	****
Torchmark	4.5	1.4	224.30%	5.3%	****
Vanguard International Equity (NYSE: VWO  )	4.3	1.3	223.18%	NM	*****
Foundation Coal Holdings (NYSE: FCL  )	2.7	1.1	138.46%	6.0%	***
Republic Services (NYSE: RSG  )	5.5	2.4	132.43%	3.1%	*****
Textron (NYSE: TXT  )	5.2	2.3	126.10%	2.2%	***
Anworth Mortgage Asset	7.7	3.5	121.17%	9.3%	*
PNC Financial Services (NYSE: PNC  )	10.7	5.2	104.95%	3.1%	*
Goodrich	1.6	0.8	104.75%	1.3%	****
NorthWestern	3.0	1.5	103.40%	8.5%	**

 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 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
Buy a toaster, and we'll toss in a bank for free. That's what investors in PNC must be thinking, considering the sweet terms on which it was able to pick up National City. PNC bought National City for about a 20% discount to its then-current share price. It will also benefit from an approximate $5 billion in income tax breaks, thanks to changes in tax rules enacted just before the purchase. The Treasury is kicking in $7.7 billion in TARP funds; it's gaining $98 billion in deposits; and just for fun, National City brings with it 19.7 million shares of Visa (NYSE: V  ) , valued at nearly $1 billion. Talk about laughing all the way to the bank.

Back in September, CAPS All-Star theeconomicsguy figured PNC would either survive the financial tsunami and grow a little larger, or get bought out. It's hard to imagine anyone guessing it would grow a lot bigger -- the acquisition makes PNC the fifth-largest bank -- and would be the one doing the buying:

Well managed bank with little exposure to the mortgage backed securities bringing other financial institutions to their knees. Well managed credit risk will allow this bank to pick up other distressed banks as the crisis continues. Expect an acquisition in the not too distant future. Look for [PNC Financial Services] to survive the crisis a little bit bigger, or acquired at a hefty premium to their current share price. Either way is a win for stockholders.

Investors in Textron have seen their shares slide 80% this year and fall 30% in this month alone. CAPS member hansthered0 finds a percentage point drop in net margins unworthy of the bloodletting the diversified industrial company has endured:

I think people are over-reacting to the Moodys downgrade. This stock has seen an 80% plunge in its price over the last year...And yet if we look at sales and profits we can clearly see that sales have remained strong and profits have taken a hit. But how much, and does that justify the 80% drop in share price.

The bottom line is a reduction in Net Profits from 6.92% to 5.94%, This hardly justifies the firesale that has gone on.

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!