The bears are out there.

We weren't hearing the growls, for the most part. Before Egypt's calamity sent global stocks lower last week, the Dow had rattled off eight consecutive weeks of price gains.

However, now that we have the short data from the exchanges for mid-January, we see that the bears weren't silenced at all.

Folks are still betting against the bulls by taking short positions -- which essentially means selling shares they don't own and buying them back later to zero out their positions.

In order to dig a little deeper into the bearish mindset, I figured I would take a closer look at the five companies with the largest short positions during the middle of last month.


Jan. 14, 2011

Dec. 31, 2010

Citigroup (NYSE: C)

358.5 million

354.6 million

Sirius XM Radio (Nasdaq: SIRI)

240.0 million

213.1 million

Ford (NYSE: F)

192.6 million

179.5 million

Sprint Nextel (NYSE: S)

119.6 million

129.5 million

Bank of America (NYSE: BAC)

115.0 million

111.6 million

Source: Barron's.

You should know these five companies fairly well.

  • Citigroup is the banking giant parent of Citibank.
  • Sirius XM is the only game in town when it comes to satellite radio.
  • Ford is the stateside automaker packing horsepower into its Mustangs.
  • Sprint Nextel is probably angling its way to become the third wireless carrier to carry the iPhone.
  • Bank of America joins Citi as the poster twins of the banking bailout.

With the exception of Sprint Nextel, these stocks saw the number of their shares sold short increase during the first two weeks of January. It's not a coincidence. The New York Stock Exchange and Nasdaq posted upticks in short interest of 0.8% and 0.7%, respectively.

Four of these five names were also among the five companies with the largest number of bearish bets when the year began. Enterprise networking specialist Level 3 Communications (Nasdaq: LVLT) just missed the cut after shorts scaled back their position by 13% during the first half of January.

It is a motley crew on the list. Two banks, one automaker, a wireless carrier, and a premium radio provider with 20 million subscribers don't have a lot in common beyond the fact that the popular stocks are actively traded on both the long and short sides of the fence.

Investors should still continue to monitor the shorting data, which comes out semimonthly. Spot the trends. Gauge sentiment. A large short position isn't necessarily a bad thing. If a positive catalyst alters the investing landscape, shorts scrambling to cover their positions can create a dramatic bullish rally called a short squeeze.

Shorts can move the market, and not always in the direction they would like.

Are you long or short any of these stocks? Share your thoughts in the comment box below.