5 Stocks You Love to Hate

Short sellers are rallying around these popular stocks.

Mar 31, 2014 at 5:16PM

Market volatility is a dinner bell for speculators, and there's no shortage of bearish sentiment for some of the most widely traded companies. Naysayers don't have to stay pessimistic on the sidelines. They can sell stocks short, profiting from the potential declines.

It isn't easy to make a living betting against stocks given the market's historical tendency to inch higher, but clearly there are always more than a few implosions along the way. Shorts can pile on companies where they see greater downside than upside, hoping that upbeat market momentum or positive catalysts don't squeeze them out.

Let's take a close look at five companies with the largest number of shares sold short as of mid-March, according to the latest data from the exchanges.

Company

March  14

December 31

Sirius XM Radio (NASDAQ:SIRI)

224.2 million

267.7 million

Intel (NASDAQ:INTC)

222.5 million

215 million

Frontier Communications (NASDAQ:FTR)

206.9 million

195.9 million

AT&T (NYSE:T)

199.2 million

131.8 million

Micron Technology (NASDAQ:MU)

124.7 million

115.1 million

Source: Barron's.

Feeding the bears
We can start with Sirius XM, which just happens to be the only name of the five to have actually seen its short interest decrease since the year began. Sirius XM is routinely the most shorted stock in the country by share volume, but that wasn't the case at the end of February, when both Intel and Frontier Communications had more skeptics. 

The satellite radio provider took a breather from the naysayers when its majority stakeholder had an offer on the table to acquire the entire company. The proposal -- unpopular with many individual investors who believe it didn't command enough of a premium -- was pulled on March 13, giving shorts an ideal opportunity to buy back in now that the downside is no longer limited.

Intel has been a fixture among the most shorted stocks. Folks aren't buying desktops and laptops the way they used to, and that naturally pressures Intel's flagship microprocessor business. Intel isn't stupid. It has been making inroads to matter more in tablets and other mobile computing gadgetry that is gaining market share at the expense of PCs.

Things haven't been great for Intel. Revenue and profitability have declined in each of the past two years. Analysts see a slight dip in earnings per share on flat top-line growth in 2014. However, the shorts are ignoring that a global economic recovery probably will breathe new life into PC sales and other Intel products.

Frontier Communications is a provider of regional telco services with an emphasis on rural markets that aren't well served by the industry's larger players. Folks are kissing their landlines goodbye, but Frontier is helping offset that with growth in broadband connectivity. The bearish argument is that Frontier's flagship services will either fade in time or face stiff competition. However, shorts have to keep in mind that Frontier offers a steep 7.1% yield. The bears are betting that it's not sustainable, but it does increase the price of riding this one out as a short. 

AT&T is one of the telco giants that Frontier bears feel will eventually make a dent, but there's also no shortage of skeptics when it comes to Ma Bell. AT&T has seen its short position more than double over the past year, and it's the one stock in this list with the biggest uptick in shorting activity since the year began. Despite the growing popularity of mobile computing devices including smartphones and tablets, competition is starting to get fierce when it comes to pricing. Analysts see revenue growing just 2.4% this year at AT&T, decelerating to 1.4% come next year.

Finally, we have Micron Technology. Declining flash memory and DRAM prices have held Micron back lately, but the stock still got a boost this morning from a bullish note out of Stifel. Reiterating its buy rating and its $31 price target, Stifel believes that Micron has the ability to withstand lower selling prices. Micron actually reports quarterly results on Thursday, so we'll get fresh financials to see how the tech bellwether is holding up. 

Don't lose your head
Investors on the long side of these five stocks don't need to panic. Many of these stocks have been able to climb the proverbial wall of worry despite having large short positions. If anything, bullish developments could trigger short squeezes that would drive the prices here as skeptics cover their negative wagers. However, it's still important to keep in mind that a lot of people think these stocks are going down. Bulls and bears can't both be right.

3 Heavily Shorted Stocks That Are Poised to Be Multibaggers
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multibagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Intel. It also owns shares of 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers