For novices, shorting a stock can be a dangerous trade.
Where you’re short, you’re betting the value of a stock goes down. But you can quickly lose money when the price goes up.
But sometimes, it pays. Just ask anyone who was short Valeant Pharmaceuticals before the stock dropped 31% over the last two weeks during the controversy over its relationship with specialty pharma Philidor.
We compiled a list of the most shorted stocks in the market. We screened for stocks with market caps of at least $2 billion, and ranked them by short interest, which is the number of shares sold short divided by the total number of outstanding shares (as of November 2).
We included some recent news on the company. And as you’ll notice, a lot of the recent news may be somewhere between immaterial to positive. In other words, not all heavily-shorted stocks have big flashing warnings signs screaming “Sell!”
Below are the 21 most heavily-shorted stocks in the market.
American Eagle Outfitters
Ticker: AEO
Short interest: 24.61%
YTD return: 12.61%
Industry: Apparel Stores
Comment: Revenues rose 11% in the second quarter as the retailer avoided sales of heavily discounted clothing.
Source: FinViz
Diamond Resorts International
Ticker: DRII
Short interest: 25.42%
YTD return: 1.94%
Industry: Resorts and Casinos
Comment: The third quarter was the company’s largest and most profitable ever. It ended up with $327 million in cash.
Source: FinViz
XPO Logistics
Ticker: XPO
Short interest: 25.92%
YTD return: -32.09%
Industry: Air Delivery & Freight Services
Comment: On October 30, XPO Logistics announced it completed its agreement to acquire Con-way, making it the second-largest less-than-truckload (LTL) provider in North America.
Source: FinViz
See the rest of the story at Business Insider
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