Since everyone loves a winner, it's reasonable to assume that everyone hates a loser -- everyone but short sellers, at least. These contrarian investors bet that hot stocks are primed to fall, aiming to turn their pessimism into potential profits.

Let's examine last month's list of companies on the New York Stock Exchange with the largest short positions. We'll consult the collective intelligence of Motley Fool CAPS to see which of these firms Fools believe have the power to make short work of short sellers. 


Shares Short, Nov. 30

Shares Short, Nov. 15

% Change

Total Shares Out

% Total Short

CAPS Rating (out of 5)

Ford (NYSE:F)







Countrywide Financial (NYSE:CFC)







Washington Mutual (NYSE:WM)







Qwest Communications (NYSE:Q)







Advanced Micro Devices (NYSE:AMD)







Shares short data courtesy of NYSE. CAPS rating courtesy of Motley Fool CAPS. Share counts in millions.

Of course, this isn't a list of stocks to buy -- or short! These stocks could have serious problems that warrant their short interest, but they might also be stricken by short-term troubles. Only Foolish due diligence will tell you for certain; our 78,000-strong CAPS community just offers a good place to start.

A countrywide crisis
The companies on this week's list are all familiar to us. While Ford still has the largest short position, the number of shares short has declined a bit. Not surprisingly, AMD has seen its short positions rise, even as Intel (NASDAQ:INTC) saw its own positions fall. AMD has come up a bit, well, short in delivering new chips on time, undoubtedly spurring on the short sellers.

Meanwhile, ailing lender Countrywide got a brief reprieve back in August, when Bank of America (NYSE:BAC) decided to give it a cash infusion of $2 billion. Even as the subprime mortgage crisis worsened, investors hoped that with B of A watching its back, Countrywide might not have problems getting the funding it needed. But the reprieve proved short-lived, and investors seem ever more concerned that Countrywide may file for bankruptcy protection, or massively dilute the value of its stock with an equity offering. Both scenarios have heartened the shorts.

With its fortunes so closely tied to the housing market, Countrywide can't afford to see housing prices fall much farther. If they do, customers may stop repaying loans, which could force the lender to default on its debt obligations, despite CEO Angelo Mozilo's assurances to the contrary.

CAPS All-Stars are betting Countrywide will underperform the market by about a 3-to-1 margin. But a few top-rated players, such as SafeAndCheap, seem to agree with those who consider the mortgage lender too big to fail: "Above average risk. But if it survives, and it probably will, it is worth more than $10/share."

On the other side, CAPS All-Star sandiegoteacher thinks there are many companies tied to the industry that have a chance to go bust:

Due to the unexpected cut of only a quarter point in the discount rate, stocks tumbled today, especially home builders and financials. Washington Mutual and Beazer look 50-50 to go bankrupt, and others in both groups have much further to go. I admit I ended my shorts in BZH and KBH last week too early, after they had only declined 50 to 75%.

Speak up
You've heard from CAPS investors -- now it's your turn to have your say. Share your views with the CAPS community: Squeeze 'em till it hurts, or short 'em till the sun don't shine? May the best argument prevail!

Help us in our goal to give every young person around the globe a financial education! Learn more about the new direction of Foolanthropy, now in its second decade, here.

Intel is a recommendation of Motley Fool Inside Value. Don't come up short by ignoring a 30-day trial subscription, available free for the asking.

Fool contributor Rich Duprey owns shares of Intel and Ford, but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. Bank of America and Washington Mutual are Income Investor selections. There's no shortcut around the Motley Fool's disclosure policy.