The list of the stocks with a high level of short interest is filled with many names investors should expect, while others may come as a surprise. The twenty stocks below have attracted a strong short presence, as measured by the amount of shares shorted as a percentage of float. As well, all of these companies are down at least 5% over the last three months. While some of these companies have fundamentally flawed business models or operations, others are still facing pressure from an anticipated key event that may or may not come.
hhgregg, Inc. (HGG) has a short interest of 54% and is down 20% over the last three months – HHGregg is currently in super growth mode, aggressively opening stores. The company has taken market share, but expansion might be overly aggressive, with CapEx eating FCF at an increasing rate, while macro-economic weakness will further damper sales, with estimates of comp sales for 2013 to be down 5%.
ITT Educational Services, Inc. (ESI) has a short interest of 46% and is down 30% over the last three months – ITT is under pressure due to new regulations, reduced government funding for Pell Grants, and gradual improvement in the job market, as well as by its relatively high tuition rates. The company’s operating and net margins have narrowed after years of solid gains, which may signify market saturation and the need for a new approach to attract prospective students.
RadioShack Corporation (RSH) has a short interest of 46% and is down 30% over the last three months – A poor sales outlook and the increasing amount of low margin items penetrating the market, including smartphones and tablets, have put Radioshack’s stock in limbo. Jim Simons recently downsized his position by 51% in 2Q, but the insider sentiment has been positive of late, with several insider purchases around $2.50 over the summer.
SUPERVALU INC. has a short interest of 40% and is down 47% over the last three months – Supervalu’s bears are shorting the stock due to sales pressures from poor unemployment and a struggling economy. Same store sales are expected to be down relative to its peers for the upcoming 2013 fiscal year.
Bridgepoint Education, Inc. (BPI) has a short interest of 35% and is down 42% over the last three months – Insiders have been dumping the stock between $9.50-$11 recently, but Jim Simons did up his small position by 25% in the company. The company faces many of the same pressures as ITT Educational Services. The company does have a PEG ratio (based on 5-yr. growth rate) of 0.39.
Overseas Shipholding Group Inc. (OSG) has a short interest of 32% and is down 34% over the last three months –Overseas has faced challenging times in the tanker market, with tanker rates expected to remain low through 2012 with new builds and economic weakness in the U.S. and Europe. In February 2012 the company suspended its dividend. The company currently struggles with trying to increase liquidity, and bridging a $100 million gap between amounts due on a credit facility versus the amount available on a new credit facility. The company’s EPS is expected to remain negative through 2013, at -$6.12 in 2012 and -$3.54 in 2013.
Barnes & Noble, Inc. (BKS) has a short interest of 32% and is down 16% over the last three months – Barnes and Noble still faces downward pressure from burgeoning e-book marketing weaker economic growth. Analyst David Schick with Stifel noted that increased competition in e-books and the decline in e-book hardware has made the market become somewhat saturated.
Molycorp, Inc. has a short interest of 31% and is down 34% over the last three months – For 2Q the company posted a $0.71 EPS loss versus expected $0.53 loss. Investor D.E. Shaw upped his stake by almost 800% in 2Q and insiders have been buying around $10. These insider purchases have instilled some confidence in the company. As well, John Griffin also took a new stock position in the company.
Titan International, Inc. (TWI) has a short interest of 28% and is down 15% over the last three months – This wheel and tire manufacturer is heavily tied to the auto industry. Ken Fisher, who owned the most shares according to the 2Q 13Fs of the funds we track, dumped over 20% of Titan in the second quarter.
MAKO Surgical Corp. (MAKO) has a short interest of 41% and is down 30% over the last three months – In 2Q, this medical device company missed its second consecutive quarterly numbers and cut guidance significantly. Slowing growth over past two quarters has led investors to question the long-term viability of MAKO’s core technology and the extent to which the company can grow outside of its initial indication.
OCZ Technology Group Inc. (OCZ) has a short interest of 40% and is down 25% over the last three months – The resignation of the company’s founder and CEO has placed even more pressure on the company. As well, the CFO announced his resignation last month. OCZ has been negatively pre-announcing revenues for the past few quarters the company has disappointed on the top and bottom lines of late due to component shortages.
Zipcar, Inc. (ZIP) has a short interest of 39% and is down 26% over the last three months – Zipcar disappointed on second quarter results and lowered guidance. The marketing overall is expected to take several quarters, coupled with European headwinds, the company has come under pressure. One insider has been aggressively buying up shares of the company though.
Questcor Pharmaceuticals, Inc. has a short interest of 36% and is down 49% over the last three months –is a specialty biopharmaceutical company that primarily provides H.P. Acthar Gel, a prescription drug for autoimmune disorders. A fewinsiders have been getting out as the company has rebounded slightly. The uncertainty of Questor’s ability to develop another key drug has caused Joseph Edelman to drop 34% and William Leland Edwards to drop 43%.
Carbonite Inc. (CARB) has a short interest of 36% and is down 12% over the last three months –This personal computer backup company had a net loss for the first half of the year that decreased 29% YOY to -$10.1 million. The company is expected to continue to report negative full-year EPS for 2012 and 2013. Jim Simons may see value here, initiating a new small position during 2Q.
KIT digital, Inc. (KITD) has a short interest of 35% and is down 26% over the last three months – KIT provides IP-based video enablement technologies. The hedge fund activity has been positive for the stock, even though the company operates in a niche market that has come under pressure with IT budget guts. Chuck Royce and Chase Coleman are both top hedge fund owners in this stock.
Jive Software Inc. (JIVE) has a short interest of 34% and is down 26% over the last three months – Jive reported 2Q revenues above estimates, at $27 million versus $26.6 million, and EPS in line with estimates. The 2Q results also showed 59% growth in year over year organic product revenue growth. Europe continues to be a drag on the company. Jive’s software is still developing and shows lots of risks given the young market.
Deckers Outdoor Corp has a short interest of 31% and is down 14% over the last three months – Unusually warm weather has placed pressure on the company, as weak sales of UGG and Teva boots forced downward pressure on the company’s stock. As well, the company sees sheepskin cost increases of 40% in 2012, on top of a 27% increase in 2011. Christian Leone believes the pressure is a buying opportunity. Christian with Luxor Capital Group increased his position in 2Q by 400% and Deckers now makes up over 6% of Luxor’s 13F portfolio.
Coinstar, Inc. (CSTR) has a short interest of 29% and is down 7% over the last three months – Concerns over transaction volume for Redbox has put Coinstar under pressure. Transaction volume for 2Q was $458 million versus $471 million estimates. As well, 3Q guidance also indicated even lower upcoming transaction volume. However, Jim Simon and Ken Griffin upped their stakes by 73% and 293%, respectively.
Glu Mobile Inc. (GLUU) has a short interest of 29% and is down 5% over the last three months – This mobile game company has rebounded of late, with first half 2012 revenues up 32% to $45.2 million. Although the company’s net loss increased 100% to -$9.8 million the company has been aggressively spending on R&D, up 97% to $30.7 million. Even though the company still has a lot to prove, Ken Griffin essentially took a new position in 2Q, but one insider has been selling on the rising stock price, getting out around $5.
Netflix, Inc. has a short interest of 29% and is down 10% over the last three months – Netflix has been under pressure since mid-2011. The company has struggled with living up to expectations and reassuring investors it has a sustainable business model. In 2Q the company announced further lackluster streaming subscriber additions, and tempered its outlook. John Griffin of Blue Ridge Capital believes the selloff has been overdone has been slowly upping his ownership, by 6% in 2Q, and now owns 2.5 million shares.
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This article was originally published as 20 Stocks With Horrifically High Levels of Short Intereston Fool.com
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