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.
This week, let's look at companies on the New York Stock Exchange with the largest decrease in the number of shares short. Combining that with the collective intelligence of Motley Fool CAPS, we'll see which of these companies Fools believe have the power to continue to make short work of short-sellers.
|
Company |
Shares Short-May 30 |
Shares Short-May 15 |
% Change |
Float^ |
% of Float |
CAPS Rating (out of 5) |
|---|---|---|---|---|---|---|
|
Allianz |
2.6 |
17.4 |
(85.25%) |
3,528.0 |
0.07% |
*** |
|
Annaly Capital Management |
19.9 |
29.1 |
(31.70%) |
465.8 |
4.26% |
** |
|
Unum |
8.0 |
17.0 |
(53.07%) |
344.6 |
2.31% |
***** |
|
Sanofi-Aventis |
4.2 |
11.0 |
(62.12%) |
2,103.8 |
0.20% |
***** |
|
Rite Aid |
36.2 |
43.1 |
(15.87%) |
529.3 |
6.85% |
** |
|
Duke Energy |
32.1 |
38.7 |
(17.00%) |
1,254.0 |
2.56% |
**** |
|
Limited Brands |
17.9 |
24.3 |
(26.38%) |
284.4 |
6.29% |
** |
|
STMicroelectronic |
3.8 |
10.2 |
(62.46%) |
638.8 |
0.60% |
*** |
|
Union Pacific |
6.0 |
11.2 |
(46.32%) |
513.8 |
1.17% |
***** |
|
Sprint Nextel |
78.8 |
83.7 |
(5.90%) |
2,797.6 |
2.82% |
** |
Shares short data courtesy of wsj.com. CAPS Rating courtesy of Motley Fool CAPS. Share counts in millions.
^Shares outstanding, minus shares controlled by insiders, restricted stock and shares held by 5% owners, as per wsj.com.
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 105,000-strong CAPS community just offers a good place to start. Yet investors seem to like most of these companies, as evidenced by their mostly three-star or better CAPS ratings.
No more static?
With all of the customer defections that Sprint Nextel has been experiencing, combined with the aggressive pricing policies of rivals like Verizon
To that end, he unveiled his company's own "talk all you want" plan for $100, along with a new Instinct phone to challenge the iPhone. Certainly the market has been impressed with what it's seen, bringing Sprint back from the abyss and bidding up its shares by more than 60% from the nadir hit back in March.
Around the time of that low point, CAPS investor PrinciplesPlus saw reasons for a turnaround in the making: Either public perception changes or the company gets bought out for a premium. A rumor actually did blossom that Deutsche Telekom was interested in Sprint Nextel, but the main driver has been the perception that Sprint can make a go of it. Here's an excerpt from the much longer pitch.
There is so much negativity built into Sprint that you just can't push it down much more... You have to look at the hand that Sprint holds, though... Sprint outperforms in both voice and data... Add to that Sprint's recent improvements in customer service, industry-best pricing plans and pretty cool phone lineup and you will start adding customers again. Even if you simply value the company based on assets, it looks cheap ... with loads of spectrum in the 800, 900, 1900 and 2500 MHz bands... Two options for Sprint ... a) Public perception shifts and profits accelerate b) Company is bought up for a premium.
Way to go, PrinciplesPlus! That pick has outperformed the market by nearly 42 points.
Speak up
You've heard from the CAPS community -- 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!
