Because 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.
These companies on the American Stock Exchange had the largest percentage increase in shares sold short recently. Combining that with the collective intelligence of Motley Fool CAPS, we'll see which of these companies some Fools believe have the power to make short work of short-sellers.
|
Company |
Shares Short Oct. 15 |
Shares Short Sept. 30 |
% Change |
% Float |
|
|---|---|---|---|---|---|
|
Taseko Mines |
1.0 | 0.5 | 88.7% | 0.6% | **** |
|
YM BioSciences |
1.4 | 1.2 | 13.7% | 1.8% | ** |
|
VirnetX |
5.1 | 4.6 | 11.9% | 15.4% | * |
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 170,000-strong CAPS community offers a good place to start.
The short list
There was a big run-up in the price of copper miner Taseko Mines from mid-September to mid-October, which might have encouraged short-sellers to think it was time for a correction. But copper prices have been rising rapidly and the market for the metal has been favorable. Sales at Encore Wire
China's purchasing managers' index jumped to 54.7% in October from 53.8% the month before, and that's causing copper prices to rise even more. With the ISM index for manufacturing activity rising unexpectedly as well, the forces behind the rise in both Taseko and Freeport-McMoRan
Other metals might grab the headlines, but CAPS member WPThatcher says you ignore copper at your peril. Only you can know whether this type of investment is suited for your portfolio, but you can add Taseko Mines to your My Watchlist page and have all the Foolish news and analysis about it gathered for you in one place.
Its business is business
There hasn't been a similar catalyst to help propel YM BioSciences, yet the shares are almost 20% higher today than where they were a month ago and are more than 63% above their year-ago price.
Cancer research always promises to be an area for exciting opportunities, but also dismal disappointments. YM BioSciences has a lot of potential, just as Erbitux did, though it has little to show for it right now. Its lead drug, nimotuzumab, is designed to treat epithelial cancers, or carcinoma, and be administered in conjunction with chemotherapy and radiotherapy. It has been approved for nasopharyngeal cancer in China, and for head and neck cancer in Argentina, Colombia, India, and Peru.
CAPS All-Star zzlangerhans thinks YM BioSciences won't have the success its many proponents think it will, but in the interim it will suck down cash until the results are final.
The short term performance of the stock is unpredictable, due to multiple late-stage [nimotuzumab] trials in progress and intermittent releases of interim data. However for the long term I believe it is unlikely that nimo will ever see the light of day but will use up another 200M or so of capital. Where will that capital come from? Hint-it won't be good for the share price
Squeezed to death
Short-sellers might feel that there's just one reason anyone is interested in VirnetX Holding these days, and that's its huge win against Microsoft earlier this year that led to the software giant becoming the first licensee of VirnetX's technology. And they might believe its 15 minutes of fame is coming to an end, despite it putting Cisco
That seems to be a mistake. If the rumors turn true that the litigants are looking to settle the patent infringement lawsuits, VirnetX could get a huge amount of cash. But rumors aren't the basis for a sound investment strategy, which is why CAPS member erkaye says to just look at the strength of its portfolio.
Portfolio of intellectual property for Internet security. Used by many major corporations who do or will pay royalties.
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!
