You don't stop the presses for the obvious. We've turned our backs on the financial-services industry? That's old news. However, what if I told you that we're still collectively bailing in droves? What if I could prove to you that the venom-oozing bears are showing no sign of hibernating?

Well, all the proof you need can be found by scouring the latest short interest data.

Investors love to bet against stocks in iffy markets, hoping to cash in by shorting companies that they believe are headed lower. As of the end of November, there were 12.8 billion shares sold short on the New York Stock Exchange, 3% more than the 12.4 billion shares that were shorted as of mid-November.

Now let's take a look at the five companies with the greatest increases in shorted shares during the second half of November.




Fannie Mae (NYSE:FNM)

50.6 million

24.0 million

26.6 million


37.6 million

16.7 million

20.9 million

Countrywide (NYSE:CFC)

131.3 million

112.5 million

18.8 million

Washington Mutual (NYSE:WM)

92.0 million

75.6 million

17.4 million

Freddie Mac (NYSE:FRE)

34.8 million

18.6 million

16.2 million

Source: Barron's.

Set Mylan aside and you have four financial juggernauts. Now let's put the timeline into its proper perspective. We've known about the subprime fallout for several months now. Even though it seems as if every trading day finds a new company rattling skeletons in its closet, it's not really coming as much of a surprise anymore. We know that risky loans are going to be marked down. We know that the lending industry may never be the same.

Again, these are things that we knew ages ago. But do you see what's going on? Folks are just now turning bearish on these companies. They are selling the stocks short, hoping to profit by buying them back at lower prices later. Over the last two weeks of November, nearly 80 million net shares were shorted of Fannie Mae, Countrywide, Washington Mutual, and Freddie Mac combined.

Are investors hating on the financial stocks even more than we're seeing with real estate developers? Not exactly. If we analyze the November data you'll find that the list of short interest ratio leaders -- the stocks with the greatest number of shorted shares relative to their average daily trading volume -- is still loaded with fallen housing darlings. WCI Communities (NYSE:WCI), St. Joe (NYSE:JOE), and Beazer Home (NYSE:BZH) have higher short interest ratios than market whipping posts like Vonage and Krispy Kreme.

Then again, they say that misery loves company. If that's true, then make sure the developers get invited to the financial-services mixer. Just keep the bears away from the spiked punch bowl.

Washington Mutual is an Income Investor selection. If you want to know why the yield-chasing newsletter is loving a stock that so many are hating, you don't need flowers and a box of chocolates for a month-long date. A 30-day free trial subscription is your ticket to experience it all before the holidays.

Longtime Fool contributor Rick Munarriz isn't all that tall, but that doesn't mean he loves to short stocks. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.