Because 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 profits.
This week, we'll take a look at companies on the Nasdaq exchange with the largest number of shares sold short as a percentage of a company's float. Combining that with the collective intelligence of Motley Fool CAPS, we'll see which of these companies may have the power to make short work of short-sellers, according to Fools.
|
Company
|
Shares Short-Oct. 31
|
Shares Short-Oct. 15
|
% Change
|
% Float
|
CAPS Rating (out of 5)
|
|
Acura Pharmaceuticals
|
0.8
|
0.8
|
(0.10%)
|
133.6%
|
*
|
|
Source Interlink
|
12.2
|
12.3
|
(0.37%)
|
52.4%
|
**
|
|
Corus Bankshares (Nasdaq: CORS )
|
15.4
|
17.2
|
(10.43%)
|
51%
|
*
|
|
NutriSystem (Nasdaq: NTRI )
|
12.6
|
13.3
|
(4.74%)
|
49.2%
|
****
|
|
Cal-Maine Foods (Nasdaq: CALM )
|
6.1
|
7.9
|
(22.69%)
|
47.8%
|
****
|
|
Green Mountain Coffee Roasters (Nasdaq: GMCR )
|
8.7
|
8.8
|
(0.68%)
|
47.5%
|
**
|
|
Conn's (Nasdaq: CONN )
|
4.3
|
4.7
|
(7.82%)
|
46.7%
|
***
|
|
lululemon athletica (Nasdaq: LULU )
|
8.5
|
9.3
|
(8.49%)
|
46.3%
|
**
|
|
Gander Mountain
|
2.7
|
2.2
|
25.20%
|
45.5%
|
*
|
|
CompuCredit (Nasdaq: CCRT )
|
6.8
|
5.9
|
14.91%
|
44.5%
|
***
|
Source: wsj.com. 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 120,000-strong CAPS community offers a good place to start.
The short list
With sales dropping 13% for the third quarter, NutriSystem learned the hard way that an anticipated spike in September sales never materialized. And in addition to worries about the slowing economy, it has to contend with Jenny Craig, Alli, and weight-loss leader Weight Watchers in competing for market share. CAPS member 6and8, however, finds the primary risk to be that some diet systems are little more than fads.
Deep value opportunity. Growing mix shift of customers toward previous [NutriSystem] users, those who have already bought into efficacy and need to control their weight again. Programs involve shipments of food in monthly steps -- natural rotation of users as they achieve their personal weight targets. Reduced marketing costs to reach this 'installed base' of customers as well. Main risks relate to the next weight loss fad-drug or diet craze. Typically result in short term competitive threats (ie. Atkins).
CAPS member Fttttt believes Corus Bancshares' underlying assets may hold value despite some iffy loans.
Despite high non performing loans portfolio, leverage is only 11 times equity. It is much higher for typical US banks. It has much better underlying assets, of which it can usually recover full value of its loans at fire sale prices. Additionally, there is some extra money tucked away in the holding company which can be used for these rainy days.
If it is able to stay afloat look for this company to trade back to book value.
In a reply to Fttttt's pitch, All-Star d1david notes that Corus was a major investor in WCI Communities, which has filed for bankruptcy protection.
"better underlying assets"?? They were the main lenders in WCI communities and we know what happened to them.
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 sun don't shine? May the best argument prevail.
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