Short Interest Surges In Semiconductors (AVGO, MRVL, MXIM)

Among the leading semiconductor stocks,

,

and

saw the most significant upswings in

between the April 30 and May 15 settlement dates. Gains in the number of shares short during the period were seen also at Applied Materials, KLA-Tencor, Lam Research, Qualcomm, STMicroelectronics and Xilinx. However, short interest in NVIDIA, Micron Technology and Texas Instruments was essentially the same in as in the previous period. Short sellers retreated from Advanced Micro Devices, Altera, ARM Holdings, Broadcom, Cirrus Logic, Intel and Linear Technology in the first two weeks of the month. Below we take a closer look at how Avago Technologies, Marvell Technology and Maxim Integrated Products have fared and what analysts expect from them.

Short interest in this Singapore-based company surged about 147 percent to almost 6.82 million shares in the period. That was less than three percent of the float, as well as by far the greatest number of shares short in at least a year. The average daily volume surged as well to more than 8 million shares. Avago completed its acquisition of LSI during the period and became an S&P 500 component. The company has a market capitalization of more than $17 billion and a dividend yield near 1.5 percent. Its operating margin that is better than the industry average and the return on equity is about 20 percent. Of the 23 analysts surveyed by Thomson/First Call, 18 recommend buying shares, with four of them rating the stock at Strong Buy. Their mean price target, or where analysts expect the share price to go, is only marginally higher than the current share price. Little to no upside is indicated at this time. The share price hit a multiyear high this week, and as of Wednesday's close was almost 34 percent higher year to date. The stock has not only outperformed the broader markets over the past six months, but competitors Analog Devices and Finisar as well.

After a rise of more than 23 percent in the previous period, short interest in this Bermuda-based company increased again, more than 34 percent, to around 5.78 million shares. That was less than two percent of the float, and still less than the 10 million or so shares short at the end of March. This integrated circuits maker has a market cap of about $8 billion and a dividend yield near 1.5 percent. Analysts are looking for more than 13 percent growth in revenue in the current quarter and the full year. The company has a long-term earnings per share (EPS) growth forecast of more than 11 percent. For at least three months, the consensus recommendation of analysts surveyed has been to hold Marvell Technology shares. Note that a move to their mean price target would be a gain of more than six percent for shares. That consensus target would be a new 52-week high. Shares have traded mostly between $15 and $16 since mid-February, but they are up almost 12 percent from six months ago. The stock has outperformed not only the likes of Texas Instruments over the past six months, but the Nasdaq and the S&P 500 as well.

The number of shares sold short in this San Jose, California-based company grew about 27 percent to around 4.49 million shares in the first weeks of the month. That was more than one percent of the float, and it took back most of the slump in the previous period. The days to cover rose to almost two. Better-than-expected EPS posted just before the period resulted in at least two analyst upgrades. The company has a market cap of more than $9 billion and a dividend yield of about 3.0 percent. The price-to-earnings (P/E) ratio is less than the industry average. The return on equity is about 16 percent. The consensus recommendation of the analysts polled is to hold shares, and it has been for at least three months. They believe the shares have little head room, as their mean price target is less than four percent higher than the current share price. That consensus target would be a new 52-week high, though. The share price is up more than six percent in the past month and more than 22 percent higher year to date. The stock has outperformed competitor Analog Devices and the broader markets over the past six months, though it has underperformed STMicroelectronics.

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