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.


March  14

December 31

Sirius XM Radio (NASDAQ:SIRI)

224.2 million

267.7 million


222.5 million

215 million

Frontier Communications (NASDAQ:FTR)

206.9 million

195.9 million


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.

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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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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