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Beating Back the Short Attack

By Rich Duprey - Updated Apr 5, 2017 at 8:04PM

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Are these stocks making short work of short-sellers?

Because 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 we'll take a look at companies on the New York Stock Exchange with the largest percentage change in the number of shares sold 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-Nov. 14

Shares Short-Oct. 31

% Change

% Float

CAPS Rating (out of 5)

Total (NYSE:TOT)

14.0

2.4

493.4%

0.6%

****

News Corp. (NYSE:NWS)

11.3

3.1

268.9%

2.7%

****

Nationwide Health Properties

9.6

4.0

137.3%

10%

*****

Chicago Bridge & Iron (NYSE:CBI)

2.2

1.1

103.3%

2.3%

****

Deutsche Bank (NYSE:DB)

5.9

3.1

87.9%

1%

*

HDFC (NYSE:HDB)

2.9

1.5

86.5%

2%

***

Banco Santander (NYSE:STD)

15.9

8.7

82.5%

0.3%

*****

Airgas (NYSE:ARG)

1.6

0.9

76.7%

2.1%

*****

Tenaris

4.4

2.5

73.8%

1.9%

****

Companhia Paranaense de Energie

0.9

0.5

73.8%

0.7%

****

Sources: wsj.com. Share counts in millions.

Of course, this isn't a list of stocks to buy -- or short. These stocks could have serious problems that warranted their short interest, but they might also be stricken by short-term troubles. Only Foolish due diligence will tell you for certain; our 120,000-member CAPS community offers a good place to start.

The short list
Let's not call it a total wipeout, but the welcome reprieve from high oil prices has been putting a hurt on French petroleum giant Total. As crude oil dropped below $43 a barrel, Total shares were punished as they haven't been in almost five years. That's one of the reasons why CAPS member BernsDesign figures it will underperform the market for much of the next year, but expects it to recover strongly.

This is a long buy. Oil prices will eventually ratchet up again. In the meantime expect this security to be volatile, and pay a good dividend. TOT will underperform for the next 6-12 months.

Considering its exposure to the print and media markets, it's not surprising that News Corp. finds itself as a sub-$10 bargain stock. Yet it's more than just a newspaper publisher, and its Fox division has a number of rich properties that should pay off. Its online video streaming service hulu, for example, had CAPS member wowdwarf thinking just a couple of weeks ago that it could be a big moneymaker.

joint venture with nbc on hulu.com its a great site and looks like it could generate more revenue then youtube as soon as next year. That plus the market cap just under $4.75B at time of this post makes it look like a great buy to me

Though CAPS member Ozzymendias sees Chicago Bridge & Iron as a stock that only value investors could love these days, he thinks they would be too early if they're buying now.

Wrong company to own long at this point in the economic cycle. Only premature bottom fishers will be buying. everybody else will be selling.

On the other hand, narf029 thinks its valuation is such that it presents an excellent opportunity to get in for growth over the next year.

Chicago Bridge and Iron has a very low P/E for the forward 12 months, on top of a very high projected growth rate. This stock has been incredibly unproductive for the past year, which leads to it being battered down and a great current value. I love it for the next year, and we'll see where things go after that.

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.

HDFC Bank and Chicago Bridge & Iron are Motley Fool Global Gains picks. Total is an Income Investor recommendation. Try any of our Foolish newsletters today, free for 30 days.

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

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Stocks Mentioned

Twenty-First Century Fox, Inc. Stock Quote
Twenty-First Century Fox, Inc.
FOX
Deutsche Bank Stock Quote
Deutsche Bank
DB
$8.93 (0.22%) $0.02
TotalEnergies Stock Quote
TotalEnergies
TTE
$50.71 (2.07%) $1.03
Chicago Bridge & Iron Company N.V. Stock Quote
Chicago Bridge & Iron Company N.V.
CBI
HDFC Bank Limited Stock Quote
HDFC Bank Limited
HDB
$63.07 (0.41%) $0.26
Banco Santander, S.A. Stock Quote
Banco Santander, S.A.
SAN
$2.54 (0.79%) $0.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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