Five Stocks with Increasing Short Interest (BAC, C, HPQ, TYC, MET)
Investors may wish to pay attention to short interest--the percentage of shares of a particular company that have been sold short. Over the longer-term, heavily shorted stocks may be expected to fall, as strong bearish theses may be behind the short selling. On the other hand, stocks heavily shorted could be ripe for a "short squeeze"--a powerful, temporary rally trigged by a wave of covering short sellers.
Bank of America (NYSE: BAC): Between May 15 and May 31, BAC has seen an increase in short interest of over 112 million shares. As doubts about the fate of the Eurozone have become more prominent in the minds of investors, US financial stocks may have come under fire. Short sellers could be targeting Bank of America as a way to gain downside exposure to macro risk.
Citigroup (NYSE: C): Like Bank of America, Citigroup has also seen its short interest increase. From May 15 to May 31, over 21 million additional shares were shorted. Citigroup may be seeing increased short interest for much the same reasons as Bank of America. Many traders consider Citigroup to be the weakest of the major US banks. Last Friday, Citigroup was denied by the Federal Reserve in its attempts to return capital to its shareholders.
Hewlett-Packard (NYSE: HPQ): From May 15 to May 31, HP's short interest increased over 11 million shares. Investors could be selling HP on the belief that CEO Meg Whitman's turnaround strategy will fail. After joining the company last year, Whitman has begun to overhaul HP and has moved to cut its staff. Traders could also be holding HP short as a play against the PC industry. With tablets like Apple's (NASDAQ: AAPL) iPad increasingly replacing traditional laptops, HP could see disappointing returns in the quarters ahead.
Tyco International (NYSE: TYC): Tyco's short interest increased 63% between May 15 and May 31.
MetLife (NYSE: MET): MetLife's short interest increased 29.1% between May 15 and May 31. Back in April, the company cut guidance.
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