Everyone loves a winner. It's reasonable to assume, then, that everyone hates a loser. Yet with investing, that's not always the case.
Contrarian investors love to pick through stocks that others have cast away. Value investors are the garbage-divers of the marketplace. Conversely, when stocks have a big run-up, some investors like to bet against them. They're called short sellers, and they bet that a stock is primed for a fall.
What goes up must come down
Here's a list of stocks on the New York Stock Exchange that have some of the reported largest short interest positions in April. We'll turn to the collective intelligence of the Motley Fool CAPS community to learn which of these stocks -- if any -- Foolish investors think have the power to make short work of short sellers.
|
Company |
Shares Short, April |
Shares Short, March |
% Change |
CAPS Rating (out of 5) |
|---|---|---|---|---|
|
Ford (NYSE:F) |
200.2 |
199.0 |
0.60% |
* |
|
Qwest (NYSE:Q) |
76.8 |
73.2 |
4.92% |
** |
|
Time Warner (NYSE:TWX) |
71.0 |
62.8 |
13.06% |
*** |
|
Sprint (NYSE:S) |
53.4 |
47.0 |
13.62% |
** |
|
Pfizer (NYSE:PFE) |
50.3 |
48.7 |
3.29% |
** |
Of course, this isn't a list of stocks to buy -- or short! Maybe these stocks have some serious problems that warrant the high short interest. Maybe not. What do you think? Will they be squeezed?
Tapping the CAPS advantage
Over on CAPS, more than 28,000 investors like you are looking over these same stocks. Some they like, some they don't, and they all vote on how they feel about them. Sometimes, though, the stocks that Foolish CAPS players like cross swords with those that short sellers don't.
Fools have a pretty dour opinion of these companies, although Internet media and communications giant Time Warner piques their interest a bit. Perhaps short sellers were focusing on the 18% decline in first-quarter profits. But take out some significant one-time charges and its AOL and Time Warner Cable properties were actually reporting higher earnings. While revenue may be softer than it appears on the surface, it still points to strong cable operations. Will that be enough to bolster and hearten the short sellers?
Some 18% of the more than 600 professional and novice investors weighing in on Time Warner are considered All-Stars, CAPS players who consistently outperform their peers. They've been bullish on the media and entertainment company since the beginning of the year, as revealed by its CAPS trend. Here's what a few CAPS players had to say:
- All-Star JWNJ1980 said back in February that the situation was improving. "Balance sheets getting cleaner, and Media/Entertainment is hot. Plus, Harry Potter is set for release on July 13th. Buy now, and take advantage of this undervalued beast!"
- jawbox, meanwhile, says that AOL just might be the key to Time Warner's future in 2007. "With aQuantive announcing that its billings on AOL rose nearly 300% over the first half of the year. From my experience in marketing and the online advertising space, marketers follow the leader like lemmings. More billing will come AOL's way in 2007, raising the TWX boat."
But not every All-Star is on the Time Warner bandwagon. Top-rated CAPS player kristm says:
This company never fails to not impress. In the last 30 years they've blown enough opportunities for any ten similar size companies. They lost control over portions of their film library in the mid-20th century and had to buy out Turner to get it all back. They sold Atari for pennies on the dollar compared to what it would be worth now (think Sony-type synergy) ... Without decent integration and synergy, the individual parts of TWX are worth much more on their own than they are tied together.
Speak up!
You've heard from the CAPS All-Stars; now it's your time for a star turn. Tell the CAPS community what you have to say. On Motley Fool CAPS, your opinion counts just as much as the short sellers'. Tell us what you think: Squeeze 'em till it hurts, or short 'em till the sun don't shine? May the best argument prevail!
Pfizer is a recommendation of Motley Fool Inside Value, where a 30-day guest pass allows you to be entertained by Philip Durell as he seeks out all of the market's hidden values. Time Warner is a Stock Advisor selection.
Fool contributor Rich Duprey owns shares of Ford, but does not have a financial interest in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.
