Professional investors spend the better part of their day studying financial sheets, charting numbers, and obsessively checking any and all portfolio-related news. But most of us simply don't have the time to do all that homework; investors with limited time to spend on research need a more efficient strategy. And what better way to cut corners than to see what the smart kids are doing? We say: Sneak a peek at the trading tickets of the pros.

Short-sellers are among the most sophisticated types of investors, so it's worth having a look at what they're doing. When an investor "goes short," he's actually betting on his stock to lose; instead of buying low to sell high, he's selling high to buy low. A short seller borrows shares from other investors and sells them on the open market. Sooner or later, he has to return them, and closes the short by buying back the same number of shares he initially borrowed. If he can buy back the stock at a lower price, he turns a profit off the difference.

Short-sellers take on unlimited risk because they have unlimited downside (theoretically, there's no upper limit on the stock's upside) -- if the stock keeps rising, they keep losing. For this reason, short-sellers have to be quite a bit more sophisticated than the average investor.

So if they're shorting a stock, they believe trouble lies ahead ...

But what do you do when the pros can't seem to come to a consensus? Case in point: a stock seeing excessive shorting that's simultaneously being snapped up by insiders. Sure, short sellers are thorough researchers; but who knows a company better than its own management?

Uniquely positioned within the walls of the boardroom, they're certainly privy to a lot more intelligence than anyone else. So insider sentiment is usually a pretty reliable indicator about a stock.

What's more, when there's an excess of short positions on a particular stock, the result is a bullish effect on the stock known as a "short squeeze" -- lack of supply and over-demand for the stock forces the price upward. And since short-sellers inevitably have to buy back the shares they borrowed at some point in the future, they actually limit the downside of the stock itself -- good news for the investor going long on it.

So who's got the right idea, the optimists or the gloom-and-doomers? You be the judge. For our list, we stared with a universe of heavily shorted stocks, then narrowed it down according to those seeing insider buying.

For each stock, we'll list the short float, which shows the number of shorted shares as a percentage of total shares outstanding. We'll also include the short ratio, which shows how many days of average trading volume are needed to cover all the shorted stocks.

Insider trading data sourced is from Marketwatch, and short float data sourced is from Finviz. (Click here if you'd like to access free, interactive tools to analyze all these stocks).


Insider Transactions

Short Float (% of Shares Outstanding)

Short Ratio (Days of Avg. Volume)

Watsco (NYSE: WSO)

Gary Tapella (Director) bought $173,085 worth of stock between May 5-7.



Columbia Sportswear (Nasdaq: COLM)

Stephen Babson (Director) bought roughly $1.45m worth of stock on August 11-12.



Meredith (NYSE: MDP)

Elizabeth Tallett (Director) bought $78,354 worth of stock on August 12.



Cheesecake Factory (Nasdaq: CAKE)

Jerome Kransdorf (Director) bought about $58,936 worth of stock between July 29 and August 12.



Synovus Financial (NYSE: SNV)

Insiders like James Blanchard (Director), J Purcell (Director), Frank Brumley (Director), Joe Beverly and Elizabeth Camp (Director) collectively bought $377,025 worth of stock on May 4.



Abercrombie & Fitch (NYSE: ANF)

Craig Stapleton (Director) bought $262,703 worth of stock on August 20.



Lennar (NYSE: LEN)

Insiders like Sidney Lapidus (Director), Jonathan Jaffe (COO), and Theron Gilliam (Director) collectively bought about $1.39m worth of stock between June 29 and July 16.



Whirlpool (NYSE: WHR)

William Perez (Director) bought $80,210 worth of stock on August 11.



Interactive Chart: Press Play to visualize changes in analyst ratings and market cap for all the stocks mentioned above.

Kapitall's Eben Esterhuizen and Alicia Sellitti don't own shares of any companies listed.

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