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Big Short Interest Swings In Semiconductor Stocks

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February 27, 2015 10:41 am
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Big Short Interest Swings In Semiconductor Stocks

Early February brought some big swings in the short interest among the leading semiconductor stocks. Marvell Technology Group Ltd. (NASDAQ: MRVL), NVIDIA Corporation (NASDAQ: NVDA) and QUALCOMM, Inc. (NASDAQ: QCOM) saw some of the largest upswings between the January 30 and February 13 settlement dates.

Below we take a closer look at how these three stocks have fared recently and what analysts expect from them. That is followed by a glance at the short interest trends in other chip stocks.

Marvell Technology

Short interest in this Bermuda-based company was about 15 percent higher than in the previous period to 8.03 million shares, or about 2 percent of the float. That was the greatest number of shares short since the end of November. It would take about a day to cover all short positions.

Lately this integrated circuits maker has been the subject of takeover rumors. Its market capitalization is about $8.3 billion and the dividend yield is near 1.4 percent. The company has a long-term earnings per share (EPS) growth forecast of almost 9 percent.

For at least three months, the consensus recommendation of analysts surveyed by Thomson/First Call has been to hold Marvell Technology shares. Their mean price target, or where they think the shares will go, is only marginally higher than the current share price. Also, that target is less than the recent 52-week high.

In the two-week short interest period, shares rose about 7 percent, though they have pulled back about 3 percent since. They are still up about 11 percent year to date. The stock has underperformed Texas Instruments over the past six months, but it outperformed the Nasdaq and the S&P 500.

See also: Short Sellers Come Back To Biotech Stocks

NVIDIA

Short interest in this Santa Clara, California-based company rose about 20 percent during the period to around 47.59 million shares. That was the largest number of shares sold short since last September, and it represents more than 9 percent of the float. The days to cover slipped to less than seven.

NVIDIA posted strong quarterly results during the period. It has a market cap around $12 billion and a dividend yield near 1.5 percent. The long-term EPS growth forecast of this S&P 500 component is more than 9 percent, and the price-to-earnings (P/E) ratio is less than the industry average.

For at least three months, the consensus recommendation of analysts has been to hold NVIDIA shares. A move to their mean price target would be a gain of less than 4 percent for the shares. Note though that the consensus target would be a new 52-week high.

Short sellers watched the stock climb more than 16 percent and cross above the 50-day moving average in the short interest period, but it has leveled off since. Over the past six months, the stock has underperformed larger competitors Intel and Qualcomm, as well as the broader markets.

Qualcomm

The number of shares sold short in this San Diego-based company jumped more than 24 percent to more than 15.86 million in the first weeks of February, or about 1 percent of the total float. That mostly recovered a big decline in the previous period, when short interest was at a low in the past year.

Qualcomm recently settled with Chinese regulators over antitrust issues. It has a market cap of near $118.8 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.

The consensus recommendation of the analysts polled is to buy shares of Qualcomm, and it has been for at least three months. They believe the shares have a little head room, as their mean price target is less than 5 percent higher than the current share price. That consensus target is less than 52-week high.

The share price rose more than 13 percent during the short interest period, but less than 2 percent since. It is still down more than 3 percent year to date. The stock has underperformed smaller competitors Broadcom and Texas Instruments, as well as the broader markets, over the past six months.

See also: Micron Shares Pounded On Fears Of Loss Of Business From Apple

And Others

Others that also saw double-digit percentage increases in the number of shares short include Altera, Avago Technologies, Broadcom and Linear Technology. Short interest in Applied Materials, ARM Holdings, Intel, Lam Research and Xilinx rose more modestly during the period.

There were some big swings to the downside too, with double-digit declines in Advanced Micro Devices, Cirrus Logic and Micron Technology. STMicroelectronics short interest was cut in half. Short sellers also appeared to lose interest in KLA-Tencor, Maxim Integrated Products and Texas Instruments as the shortest month got underway.

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

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