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.
These top companies on the New York Stock Exchange are among the 20 with the largest percentage increases in 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 make short work of short-sellers.
|
Company |
Shares Short June 15 |
Shares Short May 31 |
Change |
Float |
|
|---|---|---|---|---|---|
|
Teck Resources |
7.7 | 2.9 | 168.4% | 1.3% | **** |
|
LinkedIn |
2.3 | 1.1 | 102.5% | 29.4% | * |
|
Toyota |
1.7 | 0.9 | 85.8% | NM | *** |
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 also be stricken by short-term troubles. Only Foolish due diligence will tell you for certain; our 170,000-strong CAPS community offers just such a good place to start.
The short list
Two years ago, diversified miner Teck Resources was heavily in debt and struggling to survive, and China's sovereign fund came to the rescue, investing $1.5 billion to give it some breathing room. As a result, the debt picture eased, and when the pricing environment for commodities improved dramatically, Teck was positioned as a stronger, financially secure player.
Today, Teck is able to go back to the bond markets on its own to tap investors for $2 billion. The usual reasons for raising the money were given -- including general corporate purposes, capital spending, and debt repayment -- but the ratings agencies like Teck enough to impart an investment grade rating on it.
Teck will be able to retire some of its more expensive debt with lower rates and invest in a number of new and existing projects. It has, for example, what is billed as one of the world's largest undeveloped gold, copper, and silver deposits in Galore Creek that it jointly owns with NovaGold Resources
No doubt that's one reason it's an investor favorite. Of the 1,355 CAPS members rating Teck, 97% believe it will continue to outperform the broad market averages. But as the stock with the largest increase in shares sold short, short-sellers may rue their decision to bet against the miner.
Let us know in the comments section below or on the Teck Resources CAPS page how you think its mining the debt markets will lead to greater growth.
Severing the link
After stumbling badly after the initial IPO surge, professional networking site LinkedIn is up sharply again, breaking through the $100-per-share threshold yesterday. Pandora Media
They haven't regained the intraday highs from their first-day trading pops again, but for critics like me who view the social media and Internet IPOs as mini-bubbles, it's something of a comeuppance. After all, analysts at JPMorgan, Morgan Stanley, and Bank of America see LinkedIn as a $10 billion revenue opportunity (trailing revenues are currently below $300 million), and comScore recently said LinkedIn passed MySpace in unique monthly visitors in June, putting it second only to Facebook in social networking circles.
But we've seen this kind of speculation before. Some still think Facebook is worth $100 billion, and AOL
Social networking sites, Facebook aside (so far!), have shown themselves to be faddy and short lived. Look at Bebo, Myspace, WAYN, Friends Reunited, to name a few.
You can add LinkedIn to your watchlist if you're interested in learning more about its progress as well as networking with other investors on the LinkedIn CAPS page.
Adventure on the high seas
Although shares of Japanese carmaker Toyota sit about 10% below recent highs, the company has recovered well from the public relations disaster of unintended acceleration, where it seemed like some driver was crashing a Toyota or a Lexus every week because the cars suddenly sped off. Of course, the National Highway Traffic Safety Administration subsequently found -- though it was hardly as heavily reported as the crashes themselves -- that most, if not all, of the crashes were caused by drivers stepping on the gas instead of the brakes.
And while the earthquake in Japan caused a temporary blip for all car manufacturers, a resurgent Toyota has to be worrisome for Ford
About a month ago, CAPS member DaveMarcus82 said that even if Toyota's shares have held up remarkably well thus far, it doesn't mean the wheels won't still come off in the near term:
To give them credit, their share price has only fallen 9.2% since the tsunami. However, things are still heading south for this company, at least until 2012. It's impossible to ignore the loss in profit and instability of supply for them right now, but look for a bounce back next year.
With more than 3,700 CAPS members weighing in on the Japanese carmaker, more than 90% see it beating the market. Add the stock to the Fool's free portfolio tracker to see whether Toyota can get its engines running again.
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!
