Everyone loves a winner. It's reasonable to assume then that everyone hates a loser. Yet with investing, that's not always the case.
Contrarian investors love to pick through stocks that others have cast away. Value investors are the garbage-divers of the marketplace. Conversely, when stocks have a big run-up, some investors like to bet against them. They're called short sellers, and they bet that a stock is primed for a fall.
What goes up must come down
Here's a list of stocks on the New York Stock Exchange that reported the biggest increase in their short positions in April. We then turn to the collective intelligence of the Motley Fool CAPS community to learn which of these stocks -- if any -- Foolish investors think have the power to make short work of short sellers.
|
Company |
Shares Short - April |
Shares Short - March |
% Change |
CAPS Rating |
|---|---|---|---|---|
|
Motorola (NYSE:MOT) |
125.8 million |
22.8 million |
452.60% |
** |
|
Wendy's (NYSE:WEN) |
16.9 million |
6.4 million |
166.10% |
* |
|
Halliburton (NYSE:HAL) |
113.8 million |
60.0 million |
89.80% |
**** |
|
Companhia Vale do Rio Doce (NYSE:RIO) |
24.7 million |
13.5 million |
83.40% |
***** |
|
Washington Mutual (NYSE:WM) |
40.4 million |
29.8 million |
25.70% |
* |
Of course, this isn't a list of stocks to buy -- or short! Maybe these stocks have some serious problems that warrant the high short interest. Maybe not. What do you think? Will they be squeezed?
Tapping the CAPS Advantage
Over on CAPS, more than 27,000 investors like you are looking over these same stocks. Some they like, some they don't, and they all vote on how they feel about them. Sometimes, though, the lists of stocks that Foolish CAPS players like cross swords with those that short sellers don't.
As usual, Fools don't seem to think too much of this bunch, although metals and mining company CVRD has got their attention. Perhaps short sellers are thinking the rally in metal commodities is due for a break. CVRD is up 41% since Jan. 1 and fellow miners Southern Copper (NYSE:PCU) and Freeport-McMoRan (NYSE:FCX) have had strong runs as well.
Nearly one-third of the more than 900 professional and novice investors weighing in on CVRD are considered All-Stars -- CAPS players who consistently outperform their peers. They continue to see the Brazilian miner as outperforming the market. Here's what a few of those All-Stars had to say:
- ari21, who rates higher than 96% of all CAPS investors, believes CVRD is a "solid international company that will increase sales to China by 40% next year. Acquisition of Inco, a very profitable company, makes it the No. 1 nickel company. This company will be growing earnings in double digits for many years."
- EriKarju, another superstar, with a 99.75% rating, concurs, highlighting that it "is extremely profitable. Aluminum production contract with China, increasing iron production, and adding Inco does not seem to hurt stock price."
- Radioman101 also highly regards the purchase of Inco as key to industry dominance. "With the purchase of Inco these guys are the dominant miners of nickel in the world. China and India are gobbling up metals to fuel their industrialization and you can't have stainless steel without nickel. Plus RIO is big in iron ore and aluminum."
Speak up
You've heard from the CAPS All-Stars, now it's your time for a star turn. Tell the CAPS community what you have to say. On Motley Fool CAPS, your opinion counts just as much as the short sellers'. Tell us what you think: Squeeze 'em till it hurts, or short 'em till the sun don't shine. May the best argument prevail!
Washington Mutual is a recommendation of Motley Fool Income Investor. With this risk-free 30-day guest pass, you can mine the world of all the Motley Fool's market beating recommendations.
Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.
