Short Interest In Semiconductor Stocks Soars

Broadcom Corporation BRCM, QUALCOMM, Inc. QCOM and Xilinx, Inc. XLNX were among the leading semiconductor stocks that had surges in their short interest between the settlement dates of February 27 and March 13.

Here, Benzinga take a closer look at how these three stocks have fared recently and what analysts expect from them, followed by a glance at the short interest moves in other chip stocks.

Broadcom

The number of shares sold short jumped more than 37 percent to almost 6.94 million in the initial weeks of the month, which was more than one percent of the float and a little over half of the short interest at the same time last year.

At the current daily average volume, it would take more than a day to cover all short positions.

Broadcom stock earned an analyst downgrade at the end of the period, due to its limited short-term potential. The company has a market capitalization of more than $25 billion and a dividend yield near 1.3 percent.

The long-term EPS growth forecast is about 11 percent, but the price-to-earnings (P/E) ratio is greater than the industry average.

The share price is down more than two percent year-to-date, due to the recent sell-off. Broadcom shares pulled back about the same amount as the S&P 500 during the short interest period.

The stock has underperformed Texas Instruments Incorporated TXN and the Nasdaq over the past six months, but outperformed Qualcomm.

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Qualcomm

The number of shares sold short in the San Diego-based company rose more than 12 percent to more than 19.08 million in the first few weeks of March - more than one percent of the total float. This was the highest level of short interest since last August. The days to cover is still more than one.

Qualcomm recently announced plans to reduce its float and hike its dividend. It has a market cap of more than $110 billion and a dividend yield of about 2.4 percent.

The operating margin of this S&P 500 component is much greater than the industry average, and its return on equity is almost 21 percent.

38 analysts polled say to buy shares of Qualcomm, while nine of them rate the stock a Strong Buy. They believe the shares now have some head room, as their mean price target is about 13 percent higher than the current share price.

Short sellers watched the share price retreat more than five percent during the two-week period, and another more-than-two-percent since.

It is still down about 10 percent year-to-date. The stock has underperformed smaller competitors Broadcom and Texas Instruments, as well as the Nasdaq, over the past six months.

Xilinx

The number of shares sold short in this San Jose, California-based integrated circuits maker surged more than 23 percent to more than 11.60 million shares - more than four percent of the float and the highest level of short interest in the past year. The days to cover was less than three.

Meanwhile, the company's analyst day failed to drum up much excitement. Xilinx has a market cap more than $10 billion and a dividend yield of about 3.0 percent.

Its P/E ratio is less than the industry average and the return on equity is more than 24 percent.

For the past couple of months the consensus recommendation of the surveyed analysts is to hold company shares. Shares were trading higher than the mean price target as recently as the beginning of March, but now the upside indicated is around seven percent.

The share price pulled back around six percent during the short interest period, and is now more than eight percent lower year-to-date.

Last week, it fell below the 50-day moving average again. Over the past six months, the stock has underperformed competitors Altera Corporation ALTR and Analog Devices, Inc. ADI, as well as the broader markets.

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Others

Short interest in Intel Corporation INTC, KLA-Tencor Corp INTC, Micron Technology, Inc. KLAC and Texas Instruments grew more modestly during the period.

However, short sellers appeared to lose interest in Altera, Applied Materials, Inc. AMAT, Cirrus Logic, Inc. CRUS, Lam Research Corporation LRCX, Linear Technology Corporation LLTC, Marvell Technology Group Ltd. MRVL, Maxim Integrated Products Inc. MXIM and NVIDIA Corporation NVDA in the first two weeks of the month.

Short interest in Advanced Micro Devices, Inc. AMD and ARM Holdings plc (ADR)ARMH ended the period about where they began.

At the time of this writing, the author had no position in the mentioned equities.

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