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.
This week, let's look at companies on the Nasdaq exchange with the largest decrease in the number of 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: |
Shares Short: |
% Change |
Float* |
1-Month Return |
CAPS Rating |
|---|---|---|---|---|---|---|
|
E*Trade Financial |
90.3 |
104.4 |
(13.47%) |
452.8 |
9.97% |
*** |
|
Intel |
63.2 |
75.8 |
(16.63%) |
5750 |
8.15% |
**** |
|
Tellabs |
20.0 |
29.1 |
(31.16%) |
375.8 |
6.79% |
*** |
|
Yahoo! |
41.3 |
49.8 |
(17.13%) |
1110 |
2.78% |
** |
|
Marvell Technology |
24.5 |
31.7 |
(22.59%) |
481.5 |
0.18% |
**** |
|
Take-Two Interactive |
11.6 |
17.1 |
(32.33%) |
76.6 |
2.77% |
*** |
|
Patterson-UTI Energy |
8.7 |
14.1 |
(38.08%) |
151.0 |
28.52% |
***** |
|
Sonus Networks |
36.0 |
41.3 |
(12.79%) |
168.5 |
17.13% |
*** |
|
Symantec |
27.6 |
32.6 |
(15.32%) |
841.0 |
4.86% |
** |
|
Microsoft |
118.4 |
123.1 |
(3.82%) |
7970 |
1.97% |
*** |
*Float is number of shares available for trading. Data as of April 18.
Of course, this isn't a list of stocks to buy -- or to 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; and our 97,000-strong CAPS community offers you a good place to start. Yet investors seem divided in their opinion of these companies as only eight have garnered three stars or better on their CAPS ratings.
A rigged system
Going into Patterson-UTI's earnings release on May 1, it's probably not surprising that the land oil and natural gas driller has not only the greatest percentage decline of shares short on our list, but also the biggest return over the past month. It has been investing in new rigs while simultaneously improving the capacity and efficiency of its existing fleet.
Analysts aren't expecting much from the driller. Earnings are expected to come in about 30% lower on revenues that are expected to be off 8% from last year, but with natural gas prices rising in all markets, might it be set up for an earnings surprise?
Some investors think so. CAPS player jdstockman finds the need for more rigs for natural gas, well, a natural for this driller, noting simply, "land driller-needed for increased nat gas requirements."
CAPS All-Star mulchpapa has seen his estimate for share price appreciation realized a lot sooner than expected -- he opened his pick at $22.93 -- when he chose Patterson-UTI to outperform the market back in February. "I think that this company's stock price has made a turn and within one year's time will be on the lower 30's."
Yet not everyone is sold on the driller's chances; KARPATHOS1 thinks the commodities markets are ripe for rolling over:
Margins are coming off quickly. Also commodities will underperform the broad market. It seems commodities markets are overdone.
Speak up
You've heard from CAPS investors on both sides -- now it's your turn to have your say. 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!
