Wednesday, July 13, 2011

SP1500 Most Heavily Shorted Stocks

Great list of the most heavily shorted stocks by Bespoke Investment. Amazed to see that 3 stocks in our Opportunistic models appear on this list. Sears Holdings (SHLD), Savient Pharma (SVNT), and Liz Claiborne (LIZ) all have roughly 30% of the outstanding float short.

Hopefully one day these short levels will lead to a massive short squeeze. SHLD continues to buy back stock meaning that the float will continue to shrink likely leading to higher and higher percentages. What the shorts don't seem to understand is that SHLD while a troubled retail operation has a ton of valuable assets and a solid balance sheet. The short story just doesn't add up.

SVNT on the other hand just raised $100M plus to fund the sales rollout of FDA approved KRYSTEXXA that helps patients with extreme gout problems not solved by existing drugs. Shorters appear willing to bet that a slow sales start is because the drug lacks a market rather than the initial lack of a sales team. With the cash in hand, this doesn't appear to be an appealing short.

LIZ is a struggling retailer that has worked for 4-5 years to turn operations around. Now that it finally appears on track for improved operations the shorts are out in full force. The women's apparel sector has been weak, but it just might be time for those stocks to make a run.

The list is lined with other Consumer Discretionary names. Ironic considering so many top retailers are hitting 52 week highs.

Typically this list can be a great list of stocks to research though one should expect a few of them to completely collapse. Shorters have to see some reason to so heavily short a stock, but they aren't always right.






Disclosure: Long LIZ, SHLD, SVNT in client and personal accounts. Please review the disclaimer page as this should not be construed as investment advice. Please consult your own investment advisor. 


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