Everyone loves a winner. So it's reasonable to assume 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 Nasdaq exchange that reported having some of the largest increases in short-interest positions in August. We'll 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, Aug. |
Shares Short, July |
% Change |
Total Shares Outstanding |
Short % of Total, Aug. |
CAPS Rating (out of 5) |
|---|---|---|---|---|---|---|
|
Expedia (NASDAQ:EXPE) |
22.7 |
13.5 |
68.15% |
304.93 |
7.44% |
*** |
|
E*Trade Financial (NASDAQ:ETFC) |
20.7 |
12.9 |
60.47% |
423.63 |
4.89% |
**** |
|
ON Semi- |
34.7 |
27.9 |
24.37% |
290.04 |
11.96% |
**** |
|
eBay (NASDAQ:EBAY) |
35.6 |
30.1 |
18.27% |
1,360.00 |
2.62% |
**** |
|
Netflix (NASDAQ:NFLX) |
19.7 |
14.7 |
34.00% |
67.27 |
29.28% |
** |
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 65,000 investors are looking over these same stocks. Some they like, some they don't, and they vote on how they feel about them. Sometimes, though, the stocks CAPS players like cross swords with those that short-sellers don't.
While not every stock is new to the list -- ON Semiconductor has been here before -- certainly it's easy to see why some members are included. The market hasn't been looking kindly on the prospects for consolidation in the brokerage industry and even Schwab had a 17% increase in its shares short. Expedia has been hitting new 52-week highs and although that has attracted some short-sellers, there might be something of a squeeze going on inflicting pain on the shorts. Lastly, Netflix is battling the perception it's a one-trick pony that can't win against the onslaught of Apple, Amazon.com, and Blockbuster.
Of all the above companies, CAPS investors have given props to eBay with a better-than-average four-star rating, a feeling that's been growing as we can tell by a stock's CAPS trend.
More than 2,500 professional and novice investors have weighed in on the online auction house and almost 90% see it outperforming, while almost one-quarter of them are All-Stars who also see it beating the market. Take that, shorts!
Earlier this year CAPS player carguy12345 penned the top bull pitch by looking at how the credit crunch was turning the auctioneer into the neighborhood pawnshop:
With the meltdown in sub-prime along with decreasing values in the housing market, Ebay becomes the new pawnshop for the new financial crisis. Expect sales and profits to rise as a result of the meltdown in housing and tightening of credit.
The addition of PayPal and Skype has increased investor enthusiasm for this most successful auction site. With opportunities including reaching customers just getting online and increasing its presence overseas, there seem few obstacles to thwart its advance. So what's a bear have to say? CAPS investor tonyhamm02 has plenty of reasons for seeing eBay decline.
Google (NASDAQ:GOOG) has been creeping up to ebay-Often cheaper to obtain goods from sellers on google adwords. I guess [that's] due to the margins that ebay imposes on buyers and sellers.
Over the past years or so we have seen a plethora of new video sites, networking sites and the competition for ebay is turned up. But the biggest threat may be coming soon. Google is now going for its payment market, and may stage an attempt on select high margin parts of its network of buyers and sellers, by offering enticements, a better product and lower margins, and offers enormous possibilities by sucking people in with its home page marketing reach. Whatever you think of this, [ebay's] pricing power is getting weaker over time on buyers and sellers, especially if it wants to keep its market near monopoly intact.
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!
