Short-Sellers: The 6 Most Heavily Shorted Stocks on the S&P 500

Short-Sellers: The 6 Most Heavily Shorted Stocks on the S&P 500

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Unlike most traders, short-sellers buck the axiom of "buy low, sell high" and do just the opposite. These investors trust their market savvy and bet that the price of the stock they are targeting is overvalued and due for a correction.

By essentially rooting for a company to lose money, "the shorts" have generated ire from a number of different outlets in recent years. The question emerges as to whether these actors are maliciously targeting certain companies or whether they aid the markets by providing much needed corrections.

In response to the profits that many short-sellers made as the stock market crashed in 2008, the Securities and Exchange Commission stepped in and issued new regulations banning one form of the practice, naked short-selling, and issuing new rules that now require the volume of short sales on each stock to be disclosed on a daily basis.

Taking advantage of these newfound disclosure requirements, the intelligent investor will notice the trend as to whether the shorts are saying a stock is worth purchasing or if you should stay away.

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Short-sellers view themselves as market makers, and certain studies suggest they may have a point. The data shows that when the short-sellers begin to move on a stock, a price decline usually isn't far behind.

Despite this, it remains unclear as to whether these traders are prophetic in their anticipation of a price fall or if their very presence in the market scares off all other investors.

With all this in mind, we created a list of companies on the Standard & Poor 500 index that have been experiencing the highest levels of short sales as a percentage of share float. They have also been increasing their short positions month over month. In other words, short-sellers are extremely pessimistic about their future prospects.

Here are our parameters for the list:

- Short float over 15%
- Increased short covering month over month
- Listed on the S&P 500 index

What do you think — are short-sellers making the right call, or are they being overly pessimistic? (Click here to access free, interactive tools to analyze these ideas.)

Interactive Chart: Use the Compar-O-Matic to compare analyst ratings for the stocks mentioned below:

“1. Advanced Micro Devices, Inc. (AMD, Earnings, Analysts, Financials): Operates as a semiconductor company in the United States, Japan, China, and Europe. Market cap at $2.26B, most recent closing price at $3.19. Shares shorted have increased from 110.43M to 120.95M over the last month, an increase which represents about 1.76% of the company's float of 598.99M shares. Days to cover ratio at 5.33 days.

 

“2. Apollo Group Inc. (APOL, Earnings, Analysts, Financials): Provides educational programs and services at the undergraduate, master's, and doctoral levels. Market cap at $3.3B, most recent closing price at $29.10. Shares shorted have increased from 16.26M to 17.35M over the last month, an increase which represents about 1.09% of the company's float of 99.85M shares. Days to cover ratio at 9.31 days.

 

“3. Cliffs Natural Resources Inc. (CLF, Earnings, Analysts, Financials): Produces iron ore pellets, lump and fines iron ore, and metallurgical coal products. Market cap at $5.78B, most recent closing price at $40.58. Shares shorted have increased from 21.63M to 23.83M over the last month, an increase which represents about 1.56% of the company's float of 141.27M shares. Days to cover ratio at 3.52 days.

 

“4. DeVry, Inc. (DV, Earnings, Analysts, Financials): Provides educational services worldwide. Market cap at $1.54B, most recent closing price at $23.95. Shares shorted have increased from 9.72M to 11.06M over the last month, an increase which represents about 2.33% of the company's float of 57.52M shares. Days to cover ratio at 6.26 days.

 

“5. Lexmark International Inc. (LXK, Earnings, Analysts, Financials): Develops, manufactures, and supplies printing and imaging solutions for offices. Market cap at $1.55B, most recent closing price at $22.10. Shares shorted have increased from 15.54M to 17.36M over the last month, an increase which represents about 2.64% of the company's float of 68.87M shares. Days to cover ratio at 6.28 days.

 

“6. Safeway Inc. (SWY, Earnings, Analysts, Financials): Operates as a food and drug retailer in North America. Market cap at $3.92B, most recent closing price at $16.35. Shares shorted have increased from 69.66M to 73.19M over the last month, an increase which represents about 1.49% of the company's float of 236.90M shares. Days to cover ratio at 10.44 days.

 

Short data sourced from Yahoo! Finance. All other data sourced from Finviz.

 

Use Kapitall's Tools: Looking for ways to analyze this list?

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