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, we'll take a look at companies on the New York Stock Exchange with the largest percentage decrease in shares sold short. Combining that with the collective intelligence of Motley Fool CAPS, we'll see which of these companies Fools believe have the power to make short work of short-sellers.
|
Company |
Shares Short-Jan 15 |
Shares Short-Dec 31 |
% Change |
% Float | |
|---|---|---|---|---|---|
|
NorthWestern |
0.85 |
2.69 |
(68.5%) |
2.4% |
**** |
|
Gammon Gold |
1.85 |
4.44 |
(58.3%) |
1.6% |
**** |
|
Precision Drilling (NYSE:PDS) |
3.12 |
7.34 |
(57.5%) |
2% |
***** |
|
Liberty Property |
6.07 |
14.21 |
(57.3%) |
6.2% |
* |
|
Cott |
0.64 |
1.44 |
(55.9%) |
0.9% |
** |
|
Unilever (NYSE:UN) |
0.96 |
2.08 |
(53.7%) |
NM |
***** |
|
Total (NYSE:TOT) |
1.09 |
2.17 |
(49.6%) |
NM |
***** |
|
Mitsubishi UFJ Financial Group |
1.34 |
2.53 |
(46.9%) |
NM |
*** |
|
Lan Airlines (NYSE:LFL) |
1.24 |
2.25 |
(44.9%) |
NM |
** |
|
PNC Financial Services (NYSE:PNC) |
9.16 |
15.49 |
(40.9%) |
2.6% |
** |
Sources: wsj.com. Share counts in millions. NM = not meaningful.
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 simply be stricken by short-term troubles. Only Foolish due diligence will tell you for certain; our 125,000-strong CAPS community offers a good place to start.
The short list
The dominoes are still tumbling in the banking sector. Wells Fargo (NYSE:WFC) reported a fourth-quarter loss of $2.55 billion, fueled largely by more than $37 billion in writedowns related to loans it acquired from Wachovia. This follows the turmoil created by Bank of America (NYSE:BAC), when it revealed -- after the merger was approved, thank you very much -- that Merrill Lynch was in much worse shape than it had apparently let on beforehand.
CAPS member jonas80 fully expects that PNC Financial Services will be the next domino to fall when it reports earnings. It agreed to acquire troubled National City, and unexpected losses from that deal may yet emerge:
If WellsFargo releases poor results for Q4 due to the Wichovia Acquisition (which I think they will), PNC will tank due to fears that their acquisition of National City will lead to unexpected losses.
Jump-start the business
The collapse of the auto industry has led to precarious predicaments for the numerous businesses that feed off it; many dealerships and parts suppliers are reeling from the implosion. Similarly, the epic drop in oil and gas prices has caused sundry businesses around that sector to feel the effects as well.
Contract drillers in particular have had the rug pulled out from under them. Precision Drilling Trust, at just more than $5 a share, trades more than 80% below its 52-week high. Top-rated CAPS All-Star member chk999, however, thinks that despite its new nadir, Precision is a long-term winner: "This hit a 52 week low today. Who know what happens in the short run, but in the long run this should be a winner."
Similarly, Smittyh thinks the industry will rebound when the market returns to its senses and remembers how oil and gas get out of the ground in the first place. Smittyh thinks Precision has the best rigs in the business, and believes the company will benefit as a result:
In order to get oil and gas out of the ground, you have to make a hole. PDS has the best available equipment to do that. They must control their debt however.
Don't sell yourself short
It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Then 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!
