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.
Here are three companies with the largest percentage increases in shares 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
July 29
|
Shares Short
July 15
|
Change
|
Float
|
CAPS Rating
(out of 5)
|
| Samson Oil & Gas (NYSE: SSN ) |
0.7 |
0.5 |
35.1% |
NM |
** |
| Evolution Petroleum (NYSE: EPM ) |
0.7 |
0.6 |
20.0% |
3.2% |
***** |
| Rubicon Minerals (NYSE: RBY ) |
2.2 |
1.8 |
19.6% |
1.1% |
*** |
Sources: wsj.com. Share counts in millions. NM = not meaningful.
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 just such a good place to start.
The short list
Samson Oil & Gas is making good on its promise to have a busy second half of the year. Earlier this month, it provided an operational update on its recently initiated four-well drilling program while mobilizing a rig to start drilling in the Niobrara shale. It sold some of its acreage to Chesapeake Energy (NYSE: CHK ) , but will be drilling with them on property in Wyoming. It's all part of its stated intention to tap into its claims of nearly 11 billion cubic feet of proven natural gas reserves.
Samson has fairly large exposure to the region through its Hawk Springs project, but also has the Bakken, where it recently acquired 20,000 acres with an option to buy 70,000 additional acres. Speaking of Hawk Springs, it just updated progress there and noted it had been awarded approximately 956 net acres of leasehold in the play.
Still, oil stocks have been feeling the pinch of lower oil prices as concerns about the economy rocked the markets this month. Samson's shares are down 13% this month while Northern Oil & Gas (NYSE: NOG ) is down 7%. They've both pared steeper losses after talks of stimulating the economy again floated out of Washington, which also helped oil prices recover.
Evolution Petroleum isn't in the Niobrara, but rather in the Giddings field in Texas, where it derives the bulk of its revenues (and Louisiana, too). Rather than drill exploratory wells, it sticks to known deposits and looks to partner with others to minimize costs. That's helped it remain debt-free.
Short-sellers might be comparing Samson to Kodiak Oil & Gas or Brigham Exploration (Nasdaq: BEXP ) , and finding that it comes up short. Top-rated CAPS All-Star cecamadocv1, who has a perfect 100.00 rating, thinks they're shortsighted:
At this price, this is a good buy. If market remains stable the next month, and oil prices rise, which i anticipate even with the positive news coming out of Libya. I think prices will rise... Remember Libya controls what? 1 pct of oil reserves? their pretty unimportant when it comes to oil prices.
Drill down further on the Samson Oil & Gas CAPS page and let us know if it will connect with more growth.
With all four analysts who follow Evolution Petroleum thinking it can go on to beat the broad indexes, it might be short-sellers will drill a dry well here. Add it to your watchlist to see if it can prove the short-sellers wrong.
Cheap is relative
At only $1,800 an ounce, gold is once again "cheap." Considering that it was over $1,900 an ounce last week and that many expect this to be only a bit of a breather for the precious metal before it begins another inexorable climb, this may be your last, best chance to buy gold at a discount!
Although Rubicon Minerals suffered a bit of a setback with the reassessment of the deposits at its Phoenix project, the overall picture remains sharp and if Agnico-Eagle Mines (NYSE: AEM ) is any indication, worth a whole lot still. Agnico-Eagle announced last month it would acquire a 9.2% stake in Rubicon for almost $74 million and will use its own expertise in developing the project toward the next phase.
If short-sellers were looking for gold to plummet or Rubicon's vein to dry up, it seems they were missing the bigger picture. CAPS All-Star Chemdawg thinks it's time to climb aboard alongside Agnico-Eagle:
a good company at a sale price. IF AEM buys these guys out you will be glad that you were on board...either way I think this ends well for shareholders
Add Rubicon to your free stock-tracking watchlist if you want to read more about its progress, but tell us on the Rubicon Minerals CAPS page if the miner is good as gold.
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!
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