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Big Short Interest Swings In 3 Semiconductor Stocks

July 15, 2014 7:36 am
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Among the leading semiconductor stocks, Altera (NASDAQ: ALTR), Broadcom (NASDAQ: BRCM) and Marvell Technology (NASDAQ: MRVL) saw the most significant swings in short interest between the June 13 and June 30 settlement dates.

Like Broadcom, Avago Technologies, Cirrus Logic, Maxim Integrated Products and NVIDIA had double-digit percentage declines in the number of shares sold short.

Short sellers also retreated from ARM Holdings, Intel, KLA-Tencor, Lam Research, STMicroelectronics and Texas Instruments in the latter part of the month.

Gains in the number of shares short during the period were seen also at Advanced Micro Devices, Applied Materials, Linear Technology, Micron Technology, Qualcomm and Xilinx.

Below we take a closer look at how Altera, Broadcom and Marvell Technology have fared and what analysts expect from them.

See also: Analysts See Attractive Long-Term Buying Opportunity In Micron Shares


Short interest in this San Jose, California-based company jumped about 35 percent to more than 5.99 million shares in the period. That was about two percent of the float, as well as the highest number of shares short since March, after rising for three straight periods. Days to cover was more than two.

Altera announced ventures with Cavium and Lime Microsystems in June. The company has a market capitalization of almost $11 billion and a dividend yield near 1.7 percent. This S&P 500 component has a return on equity of nearly 16 percent and an operating margin that is better than the industry average.

More than half of the 27 analysts surveyed by Thomson First Call recommend buying shares. Their mean price target, or where analysts expect the share price to go, is about 11 percent higher than the current share price. That consensus target just tops the 52-week high from last September.

As of Friday, the share price is up about nine percent year to date. Shares rose more than two percent during the short interest period. The stock has not only underperformed the broader markets over the past six months, but also competitors Linear Technology and Xilinx as well.


The number of shares sold short in this Irvine, California-based company dropped more than 24 percent to around 9.49 million in the final weeks of the month. That was almost two percent of the float, as well as the lowest level of short interest since last August. It would take about a day to cover all short positions.

There was speculation during the period that Broadcom may acquire Mellanox to grab Ethernet share. Broadcom has a market cap of about $22.1 billion and a dividend yield near 1.3 percent. The operating margin is greater than the industry average but less than larger rivals Qualcomm and Texas Instruments.

Of the 42 analysts polled, 23 of them recommend buying shares, with 10 of them rating shares at Strong Buy. They believe the shares have a 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 retreated more than six percent during the short interest period, but it is more than 30 percent higher year to date. The stock has handily outperformed larger competitors Qualcomm and Texas Instruments, as well as the broader markets over the past six months.

See also: Stocks Rebound From 2-Day Drop As The Fed Confirms The End Of QE Is Near

Marvell Technology

After a decline of more than 28 percent in the previous period, short interest in this Bermuda-based company rebounded more than 32 percent to around 4.66 million shares. That was a little more than one percent of the float and still less than half of the 10 million or so shares short at the end of March.

This integrated circuits maker has a market cap of about $7.2 billion and a dividend yield near 1.6 percent. Analysts are looking for more than 14 percent growth in revenue in the current quarter and the full year. The P/E ratio is less than the industry average and the operating margin is greater than the industry average.

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 15 percent for shares. That consensus target would be a new 52-week high.

Shares fell more than three percent during the two-week period, and now they are trading in the same neighborhood as at the beginning of the year. The stock has outperformed not only the likes of Texas Instruments over the past six months, but also the NASDAQ and the S&P 500 as well.

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

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