Fitbit, Tesla Lead List Of Hot Stocks In Short-Selling Circles
Sungard's Astec Analytics delivers valuable market information to financials institutions involved in securities borrowing, lending and short selling.
Here is a list of 6 'hot stocks' Sungard's Karl Loomes highlighted.
Top Pick: Fitbit
According to Loomes, there is no "shortage of competition" within the wearable technology space and Fitbit Inc (NYSE: FIT)'s stock is the top pick in his 'hot stocks' list as Fitbit's stock has been punished since peaking back in August 2015.
Meanwhile, borrowing volume has increased 2 percent over the past week alone. However, Loomes noted that borrowing volume as a proportion of the shares available rose 5 percent which indicates that the supply has decreased. He added that this could be seen as an "indicator of falling institutional ownership."
Number 1: Tesla Motors
Tesla Motors Inc (NASDAQ: TSLA) held on to the top spot for another week.
Loomes noted that borrowing volume fell around 5 percent over the past week, but the borrowing volume as a proportion of shares available fell just 1 percent. In addition, the borrowing costs remain high but short sellers are still being "rewarded" given the ongoing decline in Tesla's stock.
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No. 2: U.S. Steel
United States Steel Corporation (NYSE: X) re-entered Loomes' 'hot stocks' list as continued demand to short the stock and a diminishing supply have resulted in borrowing costs surging 25 percent higher.
Shares of U.S. Steel have lost more than 60 percent over the past year.
No. 3: Cal-Main Foods
Cal-Maine Foods Inc (NASDAQ: CALM) is a new entrant to the 'hot stocks' list following a 38 percent gain in its stock over the past 12 months. However, Loomes pointed out that the share price is actually more than 70 percent ahead by last October and have declined since.
Loomes noted that borrowing volumes began to rise in September and gained 2.5 times in size by the end of November, at which point "cracks in Cal-Maine's advance were beginning to show."
Loomes added that the cost to borrow Cal-Main Foods' stock has "increased significantly" but short sellers that are sitting on "attractive gains" appear to be unwilling to close their position.
No. 4: Opko Health
Shares of Opko Health Inc. (NYSE: OPK) gained around 30 percent during the first half of 2015 while 6 months further on, they were 32 percent lower on the year.
Loomes pointed out that the profile of short interest is "almost the exact reverse" as one third of the borrow volume being returned in the first half and with positions more than doubling to reach a 12-month high last week as short sellers banked a $7 per share profit.
No. 5: 3D Systems
3D Systems Corporation (NYSE: DDD)' stock was a "regular member" of Loomes' 'hot stocks' list throughout 2015 but hasn't been featured in 2016 - until now.
Loomers pointed out that short sellers have recorded "substantial" gains following the 72 percent collapse in 3D Systems' stock over the past year. However, over the last week, borrowing volumes rose slightly but have dropped back. Nevertheless, with borrowing volumes "so high," the cost to borrow is "very sensitive" and has risen almost 50 percent over the past week - likely indicated "further problems lie ahead" for the company.
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