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 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 had the largest short interest positions last month. 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 continue making short work of short-sellers.
|
Company |
Shares Short-Nov. 30 |
Shares Short-Nov. 15 |
% Change |
Total Shares Out |
Nov. % Ttl Out |
CAPS Rating (out of 5) |
|---|---|---|---|---|---|---|
|
Level 3 Communications (NASDAQ:LVLT) |
164.5 |
150.1 |
9.59% |
1,540.0 |
10.68% |
*** |
|
Sirius Satellite Radio (NASDAQ:SIRI) |
117.4 |
103.0 |
13.98% |
1,470.0 |
7.99% |
** |
|
Microsoft (NASDAQ:MSFT) |
112.9 |
108.9 |
3.67% |
9,360.0 |
1.21% |
*** |
|
Charter Communications (NASDAQ:CHTR) |
94.9 |
100.7 |
(5.76%) |
403.3 |
23.53% |
** |
|
Intel (NASDAQ:INTC) |
60.9 |
70.1 |
(13.12%) |
5,850.0 |
1.04% |
**** |
Of course, this isn't a list of stocks to buy -- or short! Maybe these stocks still have some serious problems that warrant the once-high short interest. Maybe not. What do you think? Will they be squeezed?
Tapping the CAPS advantage
Over on CAPS, more than 77,000 investors are looking over these same stocks. Some they like, some they don't, and they vote on how they feel about them. And sometimes the stocks that CAPS players like cross swords with those that short-sellers don't.
While this week's list of companies is familiar to us, and Intel still counts among the largest short positions, the chipmaker's amount of shares short fell dramatically. That may owe to rival Advanced Micro Devices' (NYSE:AMD) failure to deliver new chips on time.
Are they serious about merging?
It doesn't top the list, but the number of shares going short on satellite radio provider Sirius continues to grow each month. Following speculation that its proposed merger with XM Satellite Radio (NASDAQ:XMSR) would never see the light of day, sentiment began to suggest that maybe the FCC would see the light after all. Both stocks, however, were knocked back recently when two congressmen urged the regulatory body to go slow in approving the deal.
It seems obvious to all that the investment thesis for Sirius rides on the merger's viability. Without it, Sirius will engage in an internecine battle with XM until only one remains. That's why on Motley Fool CAPS, the bull pitches focus on the merger becoming a reality.
All the same, investor BuffettBoy2 looks ahead to the next stage of technological advance, believing that Sirius can still make it:
I believe that the merger will get approved, however, there are technologies being developed that will beat out satellite radio. For now, it's a buy, but the coming years will bring confusion with a rapidly changing paradigm. I think that after a year, Sirius will either move with technology or be left behind. Until then, it is a buy.
CAPS player TMFSneakySamurai agrees that a merger approval will allow the company to focus on its real competition -- terrestrial radio:
Satellite radio is a great product that's rapidly growing its subscription base but, XM and Sirius can't possibly have a profitable future if they continue to compete against each other and divide resources (including sports broadcast contracts.) After the merger is approved, Sirius should be on a long-term path to do well and be ready to compete against its real competition: free terrestrial radio, iPods & Zunes, internet radio providers and other digital music services like cable. If you're like me, once you subscribe to Sirius or XM, there's no way you can go back to listening to terrestrial radio, especially if you're a long distance commuter. The programming and freedom from commercials is well worth the low monthly subscription fees. Plus, there won't be XM-equipped cars and Sirius-equipped cars, it will just be satellite radio equipped cars and it will compete and win against the iPod jack that's 6 inches away, just like how terrestial radio competed against 8-tracks, tapes and CD's.
Speak up
You've heard from CAPS investors; now it's your turn to 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!
