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Friday, September 12, 2014 4:22:45 PM
Most Heavily Shorted Stocks Getting Hit Hard
* September 12, 2014
Short interest figures for the end of August were released after the close on Wednesday, and with that release we sent out our semi-monthly update of short interest trends for the S&P 1500 to clients yesterday. One table in the report looked at stocks in the index that have more than 25% of their float sold short and how they have performed so far this month. One useful aspect of this list is that the performance of these stocks usually provides a good barometer of investor sentiment. When the most heavily shorted stocks rally, it is a sign that investors are more willing to hold riskier stocks which is good for the overall market. Meanwhile, when these stocks are underperforming the overall market by a wide margin, it is a sign that investors are increasingly risk averse, which at the margin is negative for equities.
So far this month, the most heavily shorted stocks are doing poorly on both an absolute and relative basis. While the S&P 1500 is down 0.98% the average return of these 29 stocks is nearly two and a half times worse at negative 2.41%. Furthermore, while there are some big losers that have dragged the average return lower, the breadth of this list is extremely negative. Of the 29 stocks listed, just ten are up so far in September. The biggest loser on the list by far this month is GT Advanced Technologies (GTAT). Following news that the new iPhone screens will not have the company's Sapphire glass, the stock has been in a free fall and is down 28% this month. After GTAT, the two next worst performing stocks listed are AK Steel (AKS) and Penn Virginia (PVA), which are down 16% and 10%, respectively.
While this list has more than its fair share of losers, there have also been some big winners. The biggest winner on the list is Conversant (CNVR), which is up big today on news that it will be bought by Alliance Data Systems (ADS) for $35 per share in cash and stock. Regular readers may remember that we highlighted this stock in a recent CNBC Fast Money interview where we said it was an attractive takeover candidate. So far in September shares of CNVR are up over 26%. The next best performing stock on the list of most heavily shorted stocks is Albany Molecular Research (AMRI), which is up just under 10% in September (and coincidentally was positively mentioned in that same interview). Outside of those two companies, only one other stock (Tuesday Morning: TUES) on the list is up more than 5% this month.
http://www.bespokeinvest.com/thinkbig/2014/9/12/most-heavily-shorted-stocks-getting-hit-hard.html
George.
* September 12, 2014
Short interest figures for the end of August were released after the close on Wednesday, and with that release we sent out our semi-monthly update of short interest trends for the S&P 1500 to clients yesterday. One table in the report looked at stocks in the index that have more than 25% of their float sold short and how they have performed so far this month. One useful aspect of this list is that the performance of these stocks usually provides a good barometer of investor sentiment. When the most heavily shorted stocks rally, it is a sign that investors are more willing to hold riskier stocks which is good for the overall market. Meanwhile, when these stocks are underperforming the overall market by a wide margin, it is a sign that investors are increasingly risk averse, which at the margin is negative for equities.
So far this month, the most heavily shorted stocks are doing poorly on both an absolute and relative basis. While the S&P 1500 is down 0.98% the average return of these 29 stocks is nearly two and a half times worse at negative 2.41%. Furthermore, while there are some big losers that have dragged the average return lower, the breadth of this list is extremely negative. Of the 29 stocks listed, just ten are up so far in September. The biggest loser on the list by far this month is GT Advanced Technologies (GTAT). Following news that the new iPhone screens will not have the company's Sapphire glass, the stock has been in a free fall and is down 28% this month. After GTAT, the two next worst performing stocks listed are AK Steel (AKS) and Penn Virginia (PVA), which are down 16% and 10%, respectively.
While this list has more than its fair share of losers, there have also been some big winners. The biggest winner on the list is Conversant (CNVR), which is up big today on news that it will be bought by Alliance Data Systems (ADS) for $35 per share in cash and stock. Regular readers may remember that we highlighted this stock in a recent CNBC Fast Money interview where we said it was an attractive takeover candidate. So far in September shares of CNVR are up over 26%. The next best performing stock on the list of most heavily shorted stocks is Albany Molecular Research (AMRI), which is up just under 10% in September (and coincidentally was positively mentioned in that same interview). Outside of those two companies, only one other stock (Tuesday Morning: TUES) on the list is up more than 5% this month.
http://www.bespokeinvest.com/thinkbig/2014/9/12/most-heavily-shorted-stocks-getting-hit-hard.html
George.
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