Companies facing negativity from Wall Street investors will have higher-than-average short-selling levels. One of the metrics used to identify bearishness is to look at short interest as a ratio to share float. In the technology sector companies with the highest short interest / float percentage are listed below (table 1).
Data Source: Bloomberg
Bearish speculators may short-sell companies that are too expensive, but this could lead to substantial losses. George Soros once short-sold technology stocks during the 2000 technology bubble, but suffered losses. Companies that have a broken business model are better candidates for short-selling. For investors searching for bullish positions, these companies are to be avoided.
From the above list (table 1), only Salesforce.com (CRM) could be considered an expensive stock but with sound fundamentals. Companies that have a possibly broken business model include Advanced Micro Devices (AMD) and GameStop Corp. (GME). AMD’s difficulty is that it is unable to compete effectively against Intel (INTC). AMD also has a graphics card division, which competes against NVIDIA Corp. (NVDA).
GameStop continues to be a company short-sellers target. Bearish investors believed for many years that console and physical games will be replaced by digital-only downloads. GameStop shares are trading well: shares bottomed at $16 and closed above $25, close to a 52-week high.
In the solar energy space, First Solar (FSLR) shares are performing better than its peers. The company reported solid quarterly earnings, while Trina Solar Limited (TSL), Yingli Green Energy Holding Co. (YGE), and Suntech Power Holdings Co. (STP) are finding new lows.
Interactive Comparative Analysis:
How do these companies compare? Using Kapitall tools, here is a comparison of the quarterly sales against number of employees. To change the comparison, change the two variables selected:
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