Everyone loves a winner, and so, everyone hates a loser -- everyone but short sellers, at least. These contrarian investors bet that hot stocks are primed to fall and aim at turning their pessimism into profit.
This week, let's look at companies on the New York Stock Exchange with the biggest decline in the number of shares short. Combining that with the collective intelligence of Motley Fool CAPS, we'll see which of these companies Fools think have the power to make short work of short sellers.
|
Company |
Shares Short: |
Shares Short: |
% Change |
Float* |
1-Month Return |
CAPS Rating (out of 5) |
|---|---|---|---|---|---|---|
|
Calpine |
19.9 |
30.9 |
(35.51%) |
248 |
(7.61%) |
*** |
|
Bank of America |
60.6 |
68.8 |
(11.80%) |
4,400 |
(12.84%) |
*** |
|
MGM Mirage |
12.7 |
18.9 |
(32.97%) |
108.1 |
(9.37%) |
*** |
|
Delta Air Lines |
17.6 |
23.2 |
(24.09%) |
292.2 |
(40.60%) |
* |
|
Huntsman |
5.6 |
11.0 |
(49.40%) |
233.4 |
(5.51%) |
***** |
|
Sprint Nextel |
45.1 |
50.4 |
(10.52%) |
2,840 |
(40.87%) |
** |
|
Western Union |
12.0 |
16.4 |
(26.92%) |
749 |
(3.44%) |
***** |
|
General Electric |
42.3 |
46.4 |
(8.77%) |
9,970 |
(1.18%) |
**** |
|
USG |
14.3 |
18.0 |
(20.66%) |
84 |
(2.97%) |
**** |
|
Johnson & Johnson |
15.4 |
19.1 |
(19.17%) |
2,830 |
(0.29%) |
***** |
*Number of shares available for trading.
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 86,000-strong CAPS community just offers a good place to start. Yet most of these companies are generally well liked, as they've garnered three stars or better on their CAPS ratings.
Feeling the squeeze
Maybe the shorts figure there's only so much blood you can squeeze from a stone. Despite Sprint's shares losing more than half their value since the beginning of the year, and despite the company turning in a quarterly performance that went from bad to abysmal, short sellers have seemingly backed off on their attack.
Perhaps they're waiting to see if the new unlimited calling plan will attract more users to the service with the annoying chirp. Drawing down on its credit facility and suspending its dividend will preserve some cash, but will it stave off the inevitable?
CAPS investors seem to be an optimistic lot; five in seven of them still see the telecom provider outperforming the market. But it's more likely that in its weakened state, Sprint Nextel becomes an attractive takeover candidate. CAPS player Kokubu thinks Mexican billionaire Carlos Slim might want to dial up Sprint. Financebikes74 says Slim or Deutsche Telekom might want to buy in.
However, CAPS All-Star ll0o0ll didn't think that mattered late last month, considering the horrendous numbers Sprint has been posting. With so many other, better companies in the industry to buy, there's no need to risk your money here.
Sprint is a deeply troubled company, just posted a $29.45bn (!!!) loss. ... The company has only $2bn in cash vs $9bn a year ago. [It's] expected to lose another 1.2 million subscribers this quarter, about the same amount it lost in all of 2007... [It] could lose even more customers in the second quarter. If you want an exposure to the telecom sector buy America Movil, MTS or China Mobile. ...
Speak up
You've heard from CAPS investors -- now it's your turn to have your say. 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!
