Short Sellers Are Optimistic About These 4 Chinese Stocks

Posted:10/23/12
By:Rebecca Lipman

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Short Sellers Are Optimistic About These 4 Chinese Stocks

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Last week it was announced that in the last quarter China’s economic growth fell to its lowest, 7.4%, in more than three years. But there were a few silver linings: retail sales were up 14.4%, and there were steady increases in industrial asset investments. Altogether, the data suggests stabilization isn’t far off. But this raises the question: Where do we invest in China today?

For ideas, we looked at the Chinese stocks trading on the US stock exchange for signs of a price increase. We used short seller activity as an indication.

Specifically, we looks at short seller activity month over month, and took only the names with significant short decreases (short covering).

Since short sellers benefit when share price falls, short covering implies short sellers are becoming less pessimistic, that the stocks below may have more upside than downside to price in over the next few days and weeks.

Do you agree with short sellers about these Chinese stocks? Use this list as a starting point for your own analysis.

1. Qihoo 360 Technology Co. Ltd (QIHU, Earnings, Analysts, Financials): Provides Internet and mobile security products in the People’s Republic of China. Market cap at $2.62B, most recent closing price at $21.96. Shares shorted have decreased from 12.91M to 10.98M over the last month, a decrease which represents about 3.93% of the company’s float of 49.15M shares. Days to cover ratio at 4.95 days.

2. Sina Corp. (SINA, Earnings, Analysts, Financials): Provides online media and mobile value-added services (MVAS) in the People’s Republic of China. Market cap at $3.73B, most recent closing price at $56.14. Shares shorted have decreased from 6.50M to 5.74M over the last month, a decrease which represents about 1.24% of the company’s float of 61.35M shares. Days to cover ratio at 2.31 days.

3. Sohu.com Inc. (SOHU, Earnings, Analysts, Financials): Engages in the brand advertising, online gaming, sponsored search, and wireless businesses in China. Market cap at $1.46B, most recent closing price at $38.44. Shares shorted have decreased from 3.52M to 3.16M over the last month, a decrease which represents about 1.21% of the company’s float of 29.71M shares. Days to cover ratio at 4.8 days.

4. Youku Inc. (YOKU, Earnings, Analysts, Financials): Operates as an Internet television company in the People’s Republic of China. Market cap at $3.19B, most recent closing price at $19.60. Shares shorted have decreased from 6.49M to 4.72M over the last month, a decrease which represents about 3.2% of the company’s float of 55.32M shares. Days to cover ratio at 3.48 days.