The more that things change, the more they remain the same.

Last September, I took a look at the five stocks with the largest short positions.

Unlike most investors, I view extreme bearish positions with bullish optimism. When folks bet against stocks by taking short positions -- which essentially means selling stocks you don't own and buying them back later to zero out your account -- it's more than just a pessimistic vote.

Short positions need to be covered, and if worrywarts head for the exits at the first whiff of positive developments, stocks can surge as the result of a short squeeze.

I'll try to prove my point in my conclusion, but the one thing that stood out in looking over the five stocks with the largest short positions a year later is that the gold, silver, and bronze medalists remain exactly the same. The one thing that has changed -- and this is important -- is that the number of shares sold short for these three stocks is roughly double to triple what they were last September.

If a short squeeze is coming, it's going to be lucrative for the bulls. Let's go over the five companies, with their short positions as of the end of August.

Citigroup (NYSE: C) -- 458.8 million shares sold short
It's true that there were as many as 1.3 billion shares of Citi sold short in May 2009. But that pessimism had been pared back to less than 120 million bearish wagers by late September 2009.

The irony here is that bears are growling again even as Citi's fundamentals are improving. Sure, Citi was one of the bigger face-plants during the banking crisis. It's certainly not out of the woods yet. However, it has managed to post back-to-back profitable quarters -- with credit losses declining in four consecutive quarters.

Ford (NYSE: F) -- 279.4 million shares sold short
A year ago, the moribund automaker was revving up as a result of the summer's Cash for Clunkers campaign. Comps have generally been strong since then.

Ford's sales did slip 10.6% last month, but that's stacked against last August when folks were taking advantage of government rebates to trade in their old gas guzzlers for newer and more efficient rides. Year-over-year comparisons will get tough in the near term, but between GM's pending IPO later this year and the surprisingly quick recovery at Toyota (NYSE: TM), and even this summer's well-received IPO for Tesla Motors (Nasdaq: TSLA), it's hard to bet against the automakers if the economic recovery holds up its end of the bargain.

Sirius XM Radio (Nasdaq: SIRI) -- 201.7 million shares sold short
A lot of things have changed for the better at Sirius XM over the past year, too. For starters, the only game in town when it comes to satellite radio has rattled off four consecutive breakeven quarters. It has also tacked on 1.1 million net new subscribers in that time.

Premium radio may not have seemed like an easy sell during the recession, but Sirius XM now has more than 19.5 million subscribers. There is the meaty question of Howard Stern's contract. His five-year deal expires in December, and neither side has gone public with whether he will return to Sirius.

Bank of America (NYSE: BAC) -- 125.9 million shares sold short
If Citigroup were the banking industry's face-plant, then Bank of America would be its kick to the groin. Both banking giants sipped liberally from the TARP pool, though it seemed as if Bank of America would bounce back quicker.

There are financial regulation concerns, but it joins Citigroup in posting better-than-expected profits during the first two quarters of 2010. The challenges are real, but Bank of America is now fetching just nine times next year's projected profitability.

YRC Worldwide (Nasdaq: YRCW) -- 123.1 million shares sold short
Shipping giant YRC Worldwide is running on a few flats lately, and the gargantuan short position is a reflection of both its cheap share price and solvency concerns.

Let's not be so quick to dismiss the trucker, though. YRC is trying to sway union members on concessions that may enhance its cost structure and help it avoid filing for reorganization.

Tall tales of short stories
These aren't horror stories. The pessimism is overboard. However, don't just take it from me. I pointed out how the top three names on this list were the same three stocks with the largest short positions from last year.

Let's see how they have performed since that article.


Sept. 28, 2009

Sept. 14, 2010










Sirius XM




The S&P 500 has climbed 5% in that time, well short of the average 45% gain of the three stocks that were the most hated -- by share volume. How confident can bears be that history won't repeat? More pessimists only mean that there are that many more shares to cover.

Go ahead and keep hating these stocks, investors. I'll be the one looking to pounce on the opportunities to go long.

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Longtime Fool contributor Rick Munarriz doesn't mind sifting through the unloved for a good buying opportunity. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.