When it comes to bearishness on individual stocks, we really don't have to guess. The major exchanges report short interest 24 times a year, updating investors twice a month on the number of wagers being placed on a stock falling.
There have been several pretty prolific names that saw their short interest kick off 2014 at 52-week lows. Let's go over four stocks that reported a record low in short interest either on Dec. 31, 2013 or Jan. 15, 2014.
Apple (NASDAQ:AAPL) -- 14.2 million shares sold short on Dec. 31, 2013
Apple had a rough fiscal 2013 in terms of performance. Revenue growth stagnated, and margins contracted to the point where the consumer tech bellwether posted its first fiscal-year decline in earnings in ages.
Fiscal 2014 didn't get off on the right foot, with Apple selling fewer iPhones during the holidays than analysts were expecting. However, Apple's stock still started to recover as the market rallied -- and naysayers ran for cover.
There were 41.6 million shorts at the end of April last year. Just eight months later, nearly two-thirds of those positions were closed out. Apple's fundamentals didn't necessarily improve, but with the stock moving 27% higher in those eight months, it was easy to see why the skeptics had their (lack of) faith rattled.
Baidu (NASDAQ:BIDU) -- 3.2 million shares sold short on Dec. 31, 2013
One of the more dramatic turnarounds has taken place with Baidu. There were 15.6 million shares sold short of China's leading search engine in mid-June. By the end of the year, Baidu's short interest was shaved by nearly 80%.
Investors were nervous in June, fearing Baidu didn't have enough skin in mobile. There were also concerns that a rival was starting to make a dent in its search stronghold in China.
Well, Baidu tackled its desktop dependency by acquiring a leading marketplace provider for mobile apps. Baidu's accelerating growth during the second half of the year debunked concerns that flagship business was peaking.
Sirius XM (NASDAQ:SIRI) -- 221.6 million shares shorted on Jan. 15, 2014
It's been five years since the satellite radio monopoly bottomed out at $0.05 a share. It's been a mistake to short the stock ever since, but that didn't stop nonbelievers from shorting a whopping total of more than 414 million shares by the end of last February.
Sirius XM Radio continues to grow its reach, closing out the year with 25.6 million subscribers. Average revenue per user continues to inch higher, and that's likely to continue since the media darling pushed through a small rate increase last month.
Netflix (NASDAQ:NFLX) -- 5.3 million shares shorted on Jan. 15, 2014
The leading video service was the S&P 500's best performer in 2013, so it's only natural to see bears clear out.
Netflix's peak shorting activity took place in April -- like Apple -- but Netflix's growth and margins continue to impress and widen. There were 10.4 million bearish wagers against Netflix at the time, and now short interest is a little more than half that amount.
Netflix closed out the year with 44 million streaming subscribers worldwide, and it's targeting 48 million by the end of March. Netflix is now streaming more than 2 billion hours of content a month. The model that seemed susceptible to competitive threats or audience boredom has a wider moat and stickier engagement metrics now. It's hard to imagine someone catching up to Netflix, and the bears are starting to realize it.
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Rick Munarriz owns shares of Netflix. The Motley Fool recommends Apple, Baidu, and Netflix. The Motley Fool owns shares of Apple, Baidu, Netflix, and Sirius XM Radio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.