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What: Shares of pharmaceuticals specialist Warner Chilcott
So what: We don't know exactly what caused the rally, but an ongoing unwinding of short positions in the stock may be partly to blame. On Monday, Reuters reported that Warner enjoyed the second-largest decline in short interest during the second-half of August.
Now what: Shorts redeemed more than 4.4 million shares between Aug. 15 and 31, down 58%. Capital IQ shows similar data. The implication? A massive short squeeze has fueled returns recently. Fundamentals and valuation will have to do the job over the long term. Do you agree? Disagree? Please weigh in using the comments box below.
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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.
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