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 a stock is primed for a fall.

Here's a list of stocks on the Nasdaq exchange that reported having some of the largest increases in short interest positions in September. 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.


Shares Short, Sept.

Shares Short, Aug.

% Change

Shares Out

Sept %
Total Out

CAPS Rating
(out of 5)

Sun Microsystems (NASDAQ:JAVA)














RF Micro Devices (NASDAQ:RFMD)







Network Appliances (NASDAQ:NTAP)














Shares short data courtesy of Nasdaq. CAPS ratings courtesy of Motley Fool CAPS. Share counts in millions.

Of course, this is not a list of stocks to buy -- or to 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 all vote on how they feel about them. Sometimes, though, the stocks CAPS players like to cross swords with are those that short sellers don't.

Although we have a new crop of stocks on this list compared to weeks past, we might understand why some members are included. VeriSign, for example, is up 60% over the past year, and short sellers might think that fears of denial-of-service attacks on the company's domains means the stock is vulnerable. As a top-rated stock on CAPS, however, those fears seem misplaced.

What accounts for the huge surge in Atmel's short interest position? The semiconductor maker sports a seemingly outrageous market multiple of 80, when competitors like Texas Instruments (NYSE:TXN) have price-to-earnings ratios just a quarter of that. But the stock has lagged the S&P 500 all year long and has actually returned a 15% loss for investors over that time. With the company investigating possible fraud by one of its former senior executives, maybe CAPS investors were right to assign it a low-confidence two-star rating.

RF Micro Devices doesn't seem to be signaling any such troubles. Top-rated CAPS All-Star reddingrunner thinks the stock is still cheap.

At the moment they just look too cheap not to buy. P/B of 1.6 and PEG of 1 and analysts are projecting increases in sales and margins. Looks like it has hit bottom and could double in the next year or so.

Industry researchers and analysts at NetScribes underscored the potential of the company earlier this year when they pointed out it is the leading supplier of cell-phone amplifiers in a market where handset growth is supposed to continue at a healthy clip.

Industry analysts are currently forecasting handset unit growth of approximately 10% with expected continued growth in Wideband CDMA handsets. This is a positive trend for RFMD because these phones contain at least two PAs, and it is the world's leading supplier of cellular PAs with market share of approximately 50%. These trends are expected to put RFMD, ahead of its peers on the growth front."

That just might lead the short sellers to getting clipped in a squeeze.

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 opinions count 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!

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. There's no short cut around the Motley Fool's disclosure policy.