Looking for rebound candidates? We screened a universe of healthcare stocks for those on a losing streak with significant levels of short covering. Clearly short sellers think these names are set for a rebound, do you agree?
Losing Streaks: We screened for this by measuring the number of days in which the stock beat the S&P 500 over the last month and the number of days in which it underperformed the S&P 500. We then compared the longest winning streak in days over the last month to the longest losing streak, and found those stocks with the lowest ratios, indicating these stocks have been underperforming the S&P 500.
Short Covering: Short sellers profit when stocks decrease in price, and lose when they rise. So it’s considered a sign of optimism (or decreased pessimism) when short sellers start to reduce their short positions. We screened for a decrease in short positions month over month.
Here are the stocks that made it though our screen. Do you think short sellers are correct that the market has been too pessimistic about these names?
Use the Turbo Chart to Compare the Performance of the First Two Companies in the List to the S&P 500:
1. Arena Pharmaceuticals, Inc. (ARNA, Earnings, Analysts, Financials): Focuses on discovering, developing, and commercializing oral drugs in the therapeutic areas of cardiovascular, central nervous system, inflammatory, and metabolic diseases. Market cap at $1.B, most recent closing price at $8.25. Shares shorted have decreased from 46.09M to 40.54M over the last month, a decrease which represents about 3.06% of the company’s float of 181.41M shares. Days to cover ratio at 1.7 days. The stock’s average daily alpha vs. the S&P500 index stands at -2.21% (measured close to close, over the last month). During this period, the longest losing streak lasted 7 days (i.e. the stock’s daily returns underperformed the S&P 500 for 7 consecutive days). The longest winning streak lasted 1 day (i.e. a win streak / losing streak ratio of 0.14).
2. Luminex Corporation (LMNX, Earnings, Analysts, Financials): Develops, manufactures, and sells proprietary biological testing technologies and products for the life sciences and diagnostic industries in the United States. Market cap at $762.12M, most recent closing price at $18.15. Shares shorted have decreased from 4.60M to 4.01M over the last month, a decrease which represents about 1.6% of the company’s float of 36.90M shares. Days to cover ratio at 8.32 days. The stock’s average daily alpha vs. the S&P500 index stands at -0.79% (measured close to close, over the last month). During this period, the longest losing streak lasted 5 days (i.e. the stock’s daily returns underperformed the S&P 500 for 5 consecutive days). The longest winning streak lasted 2 days (i.e. a win streak / losing streak ratio of 0.4).
3. MAKO Surgical Corp. (MAKO, Earnings, Analysts, Financials): A medical device company, markets its advanced robotic arm solution and orthopedic implants for orthopedic procedures in the United States and internationally. Market cap at $656.85M, most recent closing price at $15.39. Shares shorted have decreased from 15.52M to 14.34M over the last month, a decrease which represents about 3.14% of the company’s float of 37.62M shares. Days to cover ratio at 6.62 days. The stock’s average daily alpha vs. the S&P500 index stands at -2.67% (measured close to close, over the last month). During this period, the longest losing streak lasted 6 days (i.e. the stock’s daily returns underperformed the S&P 500 for 6 consecutive days). The longest winning streak lasted 2 days (i.e. a win streak / losing streak ratio of 0.33).
4. Spectrum Pharmaceuticals, Inc. (SPPI, Earnings, Analysts, Financials): A commercial-stage biotechnology company, primarily focuses on oncology and hematology. Market cap at $744M, most recent closing price at $12.50. Shares shorted have decreased from 24.46M to 22.55M over the last month, a decrease which represents about 4.07% of the company’s float of 46.93M shares. Days to cover ratio at 12.65 days. The stock’s average daily alpha vs. the S&P500 index stands at -1.23% (measured close to close, over the last month). During this period, the longest losing streak lasted 8 days (i.e. the stock’s daily returns underperformed the S&P 500 for 8 consecutive days). The longest winning streak lasted 2 days (i.e. a win streak / losing streak ratio of 0.25).
Written by Rebecca Lipman. Short seller and price data sourced from Yahoo! Finance.
Use Kapitall’s Tools: Looking for ways to analyze this list?
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Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Arena Pharmaceuticals, Inc. (ARNA, Chart, Download SEC Filings)
- Luminex Corporation (LMNX, Chart, Download SEC Filings)
- MAKO Surgical Corp. (MAKO, Chart, Download SEC Filings)
- Spectrum Pharmaceuticals, Inc. (SPPI, Chart, Download SEC Filings)
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