Some analysts think the 2013 bull market created lots of opportunities for short selling. What do you think?
Short selling is the sometimes controversial practice (depending on where you are) that involves selling another person's stock shares, and then buying them back at a cheaper price if the stock's value goes down. Since you only need to return the borrowed shares, you get to pocket the difference.
But of course, there are many hitches.
For one, short selling can generate lots of negative speculation about a company that may not be warranted. Dick Fuld blamed short selling for the Lehman Brothers crash in 2008 (although sub-prime mortgages probably didn't help…)
They can also be hard to play. For instance, if you hold the earnings from borrowed shares too long, pressure can start to mount if the price goes up even a little bit, leading investors to cover at a loss.
If a lot of people experience this pressure at once, it can create a short-squeeze, where the value of the shares skyrocket as lots of people try to cover their positions at the same time, driving up demand in a spiral effect.
We decided to see which stocks experienced the most short selling in the second half of December (the most recent data available in The Wall Street Journal's Short Interest Database). Do the results merit further investigation? Or are they being short sold for a reason?
Click on the interactive chart below to view data over time.
Is the market wrong about these six short-sold stocks? Use the list below to begin your analysis.
1. V.F. Corporation (VFC, Earnings, Analysts, Financials): Designs and manufactures, or sources from independent contractors various apparel and footwear products primarily in the United States and Europe. Market cap at $26.00B, most recent closing price at $58.78.
Shorted shares grew by 8,502,317 in the last half of December 2013, an increase of 478.2%.
Shorted shares grew by 1,231,194 in the last half of December 2013, an increase of 221.5%.
Shorted shares gew by 27,605,817 in the last half of December 2013, an increase of 169%.
4. The Container Store Group, Inc. (TCS, Earnings, Analysts, Financials): Engaged in the retailing of storage and organization products in the United States. Market cap at $1.84B, most recent closing price at $38.43.
Shorted shares grew by 1,336,566 in the last half of December 2013, an increase of 164.3%.
5. Altisource Residential Corporation (RESI, Earnings, Analysts, Financials): Focuses on acquiring, owning, and managing single-family rental properties throughout the United States. Market cap at $1.4B, most recent closing price at $34.17.
Shorted shares grew by 1,627,303 in the last half of December 2013, an increase of 135.6%.
6. Frank's International N.V. (FI, Earnings, Analysts, Financials): Provides various engineered tubular services for the oil and gas exploration and production companies in the United States and internationally. Market cap at $3.71B, most recent closing price at $24.15.
Shorted shares grew by 726,180 in the last half of December 2013, and increase of 121.4%.
(List compiled by James Dennin. Analyst ratings sourced from Zacks Investment Research. Shorting data sourced from WSJ.)
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
- V.F. Corporation(VFC, Chart, Download SEC Filings)
- UniSource Energy Corporation(UNS, Chart, Download SEC Filings)
- SunEdison, Inc.(SUNE, Chart, Download SEC Filings)
- The Container Store Group, Inc.(TCS, Chart, Download SEC Filings)
- Altisource Residential Corporation(RESI, Chart, Download SEC Filings)
- Frank's International N.V.(FI, Chart, Download SEC Filings)
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