Do the Shorts Know Something You Don't?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

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.

These companies recently had some of the largest percentage increases in shares sold short -- but they quickly pulled back. Combining that with the collective intelligence of Motley Fool CAPS, we'll see which of these companies Fools believe have the power to still make short work of short-sellers.


Shares Short
June 29

Shares Short
June 15

% Change

%  Float

CAPS Rating (out of 5)

YM BioSciences   (NYSE: YMI  ) 2.5 2.9 (12.7%) 1.6% ****

Cheniere Energy
12.4 18.0 (30.9%) 7.6% ***

Source: Share counts in millions.

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 180,000-strong CAPS community offers just such a good place to start.

Get to work!
I'll admit to being bearish about biotech YM BioSciences' prospects for beating the market. I marked it to underperform the market indexes earlier this year after it got a big boost for reporting "significant and durable responses" in ongoing phase 1 and phase 2 trials. I figured a more sober reckoning of the long road ahead of it would bring the price back to a more reasonable level, and while it's had its share of ups and downs, the stock has actually moved 22% ahead of the point I entered in at.

At these elevated levels, I obviously still see it as a dicey proposition. Although its once-a-day treatment for myelofibrosis shows a lot of promise, the market for the drug doesn't appear to be particularly large, so it isn't one that will allow for a lot of competition. With Incyte's (Nasdaq: INCY  ) Jakafi already on the market, albeit at twice-daily dosages, the breakout opportunities seem slim. I noted last month that the shorts were eying it up, but maintained that while it does have other drugs in its pipeline, it's really just focusing on CYT387. But until it successfully runs the FDA gauntlet, I feel as kemp1725 does: "It has nothing." It's tough to bet on hope, but the odds for a positive outcome are long, so I won't be changing my CAPS rating on the biotech.

Tell me in the comments box below or on the YM BioSciences CAPS page whether you think it's time for more shorts to close out their position.

Riding the coattails higher
The market researchers at IHS Global Insight expect almost $2 trillion worth of investments to be made in the shale gas industry by 2035, but with some of the heaviest action coming within the next few years. LNG export projects ought to benefit because they can help drain away the massive glut of inventory that's currently swamped the industry. While Cheniere Energy with its Sabine Pass facility in Louisiana is currently the first -- and only -- such export project approved, it could dominate the market.

According to the Financial Times, the Energy Department is required to sign off on such export permits to make sure they don't violate "the public interest," but after a handful of companies such as Sempra Energy (NYSE: SRE  ) and Dominion Resources (NYSE: D  ) followed Cheniere's lead, DOE suspended approving any more permits until it could be determined what impact exporting LNG would have. Natural gas is cheap and plentiful now; tomorrow, maybe not so much.

Even if a few of these rivals do make it through the gauntlet, Cheniere should still be the leader in export. With shares of the LNG specialist down 25% from their highs, it might represent a special value. CAPS member steelpony71 thinks being first to market is key, even if it's still a ways off from actually happening.

Add your opinion on the Cheniere Energy CAPS page or in the comments section below on whether the fickle nature of government will ultimately work against it.

Don't sell yourself short
Share your views with the CAPS community: Squeeze 'em till it hurts, or short 'em till the sun don't shine?

If you're looking for one energy stock that can capitalize on the current state of the industry, the Motley Fool has identified a company that it believes will prosper for years to come. Read more about the one energy stock set to soar in the Fool's special free report "The Only Energy Stock You'll Ever Need." Don't miss out on this limited-time offer and your opportunity to discover this under-the-radar company before the market does. Click here to access your report -- it's totally free.

Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Dominion Resources. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1953604, ~/Articles/ArticleHandler.aspx, 5/27/2016 12:39:33 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 17,864.55 36.26 0.20%
S&P 500 2,096.94 6.84 0.33%
NASD 4,927.23 25.47 0.52%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/27/2016 12:23 PM
D $71.66 Up +0.09 +0.13%
Dominion Resources CAPS Rating: ****
INCY $83.41 Up +1.63 +1.99%
Incyte Corp CAPS Rating: **
SRE $105.16 Up +0.39 +0.37%
Sempra Energy CAPS Rating: ****