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 Nasdaq exchange that reported having some of the largest increases in short interest positions since May. 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.


Shares Short-June

Shares Short-May

% Change

CAPS Rating (out of 5)






Applied Materials (NASDAQ:AMAT)










Microsoft (NASDAQ:MSFT)





Shares short data courtesy of Nasdaq. CAPS rating courtesy of Motley Fool CAPS. Share counts in millions.

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 31,000 rated investors 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 CAPS players like cross swords with those that short sellers don't.

While most of the names here are new to the list, meaning that short sellers have found new targets to dislike, it looks like the CAPS community isn't so high on them either. None rates better than an average three stars. Microsoft, however, is also seemingly being discounted by CAPS investors with its two-star rating.

Back in December, CAPS investor friendOfTrend didn't think Vista was going to do much to help out the Redmond giant. Have current sales figures borne out his skepticism?

Microsoft will soon be shipping Vista, their latest and greatest (and much delayed) desktop OS, which they promise will offer a gee-whiz, gotta have it users interface with such doodads as transparent windows so you can see what's going on underneath. The only caveat is that being able to run Vista will most likely require ditching your current computer. Of course, you could save some money and stick with your current XP machine, get your work done like you do now, and not have transparent windows. But how many people would be happy doing that? A lot, I think. Most, actually. XP is good. It doesn't crash like 95 and 98 did. Sure, there are security issues, but I don't think Vista is going to cure them. Microsoft should have seen the writing on the wall and concentrated on software for the browser like Google has been. Instead they hoped they could delay the inevitable by keeping us tied to the OS. I don't see it as a viable strategy. They're not going to go away any time soon, but I see no reason for their stock to go up.

And then there's Amgen. While not the sporting the biggest short attack, the company is still considered solid, despite its lofty price. More than 1,200 investors have weighed in on the huge biotech, and 263 of them boast All-Star status, meaning they've consistently outperformed their peers. Almost all of them are bullish on Amgen, though that sentiment has been declining since the beginning of the year (we can tell that by the CAPS trend). Here's what a few CAPS players had to say.

Mascalzone56 feels there's little in the way of the company's continued advancement:

The stock is a cash cow. Even with the aranesp issue the company has an excellent pipeline and several products that generate 1Billion plus [in] sales per year. Nothing is in danger of being replicated soon and sales for many of these products (Enbrel) can grow as indications expand.

This view is echoed by industry analyst and research firm Netscribes:

The risk the company faces is the launch of Mircera from Roche. Amgen has filed a lawsuit in federal court against Roche claiming Roche's proposed anemia treatment Mircera would violate Amgen patents. Amgen sells anemia treatments Aranesp and Epogen. Roche has applied for U.S. Food and Drug Administration approval of Mircera and a decision is expected around May 2007. Besides news flow from clinical trials for use of Aranesp in certain other situations has not been encouraging.

To conclude, despite the recent unfavorable news flow, it still has one of the most robust pipeline[s] in the sector and offers reasonable growth. It has also instituted a buyback program. Thus it clearly emerges a defensive stock with strong cash flows in otherwise volatile biotech sector. Looking at its current valuations and growth prospects the stock is likely to outperform.

Speak up!
You've heard from the CAPS community; now it's your time for a star turn. Tell the community what you have to say. Only on Motley Fool CAPS does your opinion count 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!

Both Intel and Microsoft are recommendations of Motley Fool Inside Value. A 30-day free trial subscription is your shortcut to market-beating returns. Click here to see which ones have already been selected to profit handsomely in your portfolio.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. There's no short cut around the Motley Fool's disclosure policy.