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.
This week, we'll look at companies on the Nasdaq exchange with the largest percentage increase of shares sold short. Combining that information 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, Dec. 31
|
Shares Short, Dec. 15
|
% Change
|
% Float
|
CAPS Rating (out of 5)
|
|
Grand Canyon Education (Nasdaq: LOPE )
|
1.1
|
0.5
|
112.37%
|
18.3%
|
*
|
|
Allscripts-Misys Healthcare Solutions (Nasdaq: MDRX )
|
8.1
|
4.0
|
99.38%
|
13.7%
|
****
|
|
VisionChina Media (Nasdaq: VISN )
|
3.3
|
1.7
|
89.02%
|
4.6%
|
***
|
|
Qiao Xing Universal Telephone
|
0.9
|
0.5
|
64.56%
|
3.9%
|
****
|
|
Pegasystems
|
0.9
|
0.6
|
59.20%
|
6.0%
|
**
|
|
Liberty Global (Nasdaq: LBTYK )
|
0.9
|
0.6
|
53.93%
|
0.7%
|
*
|
|
Pharmaceutical Product Development (Nasdaq: PPDI )
|
4.0
|
2.6
|
53.72%
|
3.8%
|
*****
|
|
NET Servicos de Comunicacao (Nasdaq: NETC )
|
1.1
|
0.7
|
52.78%
|
0.6%
|
*****
|
|
AeroVironment (Nasdaq: AVAV )
|
3.2
|
2.1
|
52.49%
|
22.9%
|
***
|
|
Forrester Research
|
1.6
|
1.0
|
51.54%
|
10.2%
|
*****
|
Source: wsj.com. Share counts in millions. As of 1/23/09.
Of course, this isn't a list of stocks to buy -- or short! These stocks could have serious problems that warranted their short interest, but they might also be stricken by short-term troubles. Only Foolish due diligence will tell you for certain; our 125,000-member CAPS community offers a good place to start.
The short list
As attempts to sanitize the unpleasantness of war continue, companies such as AeroVironment will see soaring opportunities for growth. The company makes unmanned drones that are useful in capturing live video images of enemy positions. With the company's shares trading at their highest levels yet, the Obama administration's plan to wind down the war in Iraq may have short sellers believing that the stock is poised to fall.
CAPS All-Star member BigFatBEAR admits that AeroVironment may have an important peacetime role to play but still thinks it's too pricey: "Even with strong growth, looks overvalued near 52 week high ... a small bet on Obama decreasing defense spending in favor of things like education. (Though to be fair, since this company specializes in innovative unmanned aircraft, it may do well even with democrats / peace time.)"
Jumpstart the business
The new administration also may be causing Allscripts-Misys to get some added attention. President Obama has said that implementing electronic medical records nationwide over the next five years will be a top priority. A number of investors, including CAPS member MonkeyRx, think that's just the sort of push the stock needs to outperform the market: "President Obama has mentioned injecting a huge part of the budget towards the exact thing that this company does, and does well."
Getting schooled
As the only company to go public in the fourth quarter, Grand Canyon Education garnered a lot of attention. It's also unique -- although it's an online provider of postsecondary education services, it also has a physical campus, complete with a Division II athletics program. But CAPS All-Star uclayoda87 thinks it's going to take more than that for the company to gain an advantage from any kind of government-funded educational training. "This stock may benefit from another government Bailout for retraining, but if it can't find paying students who think they will receive a good return on their investment, then [Grand Canyon Education's] only other hope will be to provide the government with daycare for adults out of work."
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 cows come home? May the best argument prevail!
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