Stocks that have huge short interests can be explosive movers, if good news comes out of the company, such as better than expected earnings, a merger, or an upgrade from an investment bank. Investors need to pay attention to the levels of short interest in a company, as it could be a sign that the company is having problems with its business, or the shorts believe the company is materially overvalued. A company like NetflixNFLX
is a prime example of this. Here are a few stocks that have absurdly high short interests in the companies. Rubicon Technology, Inc.
has approximately 60% of its float sold short, as ofNovember 9.
Rubicon is a semiconductor company, trading at just over 10 times next years earnings, so it's not expensive at all. The company has traded in a wide range in the past year, from $13.68 to $35.90, so shares are fairly volatile. Rubicon develops, manufactures, and sells monocrystalline sapphire and other crystalline products for optical applications. Bridgepoint Education, Inc.BPI
has a huge short interest as well, with 59% of its float sold short. Shares of BPI have been hit hard in recent months, as regulators look at for-profit education names to see if students are actually getting value out of their degrees. BPI is trading at 6 times next year's expected earnings, but given the regulatory issues, this could be expensive as earnings may decrease over time. CONN'S, Inc.CONN
has over half of its float sold short, as the specialty retailer continues to deal with a struggling U.S. consumer. It's trading at just under 16 times 2011 earnings. Conn's is a specialty retailer that sells home appliances, consumer electronics, home office equipment, lawn and garden products, mattresses, and furniture around the country. The Great Atlantic & Pacific Tea Company, Inc.GAP
is the last company being discussed, with over half of its float sold short. The embattled supermarket chain has been the subject of bankruptcy rumors in the past, and given the low valuation of the company, the bears might be right in this name. Should the business turn around, shares of GAP could see an explosive move upwards. The Great Atlantic & Pacific Tea Company operates conventional supermarkets, combination food and drug stores, and discount food stores. Disclosure: no position in any names mentioned
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