Market Overview

Short Sellers Favor These Three Semiconductor Stocks

Short Sellers Favor These Three Semiconductor Stocks
  • While short interest in semiconductor stocks was mixed again in late September, upswings generally were stronger than downswings.
  • Short sellers piled on Altera, Skyworks Solutions and Marvell Technology in particular during that time.
  • Qorvo saw the only significant decline in the number of shares short.

While short interest was mixed in the leading semiconductor-related stocks between the September 15 and September 30 settlement dates, for the most part upswings were stronger than downswings.

That was particularly evident in Altera Corporation (NASDAQ: ALTR), Marvell Technology Group Ltd. (NASDAQ: MRVL) and Skyworks Solutions Inc (NASDAQ: SWKS), which saw surges in the numbers of their shares short in the final two weeks of the month.

Below is 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 moves in other key chip stocks.

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Short interest in this San Jose, California-based company jumped about 24 percent to more than 8.03 million shares in the period. That was more than 2 percent of the float, as well as the greatest number of shares short since June. It would take more than two days to cover all short positions.

Short sellers are looking ahead to Altera's takeover by Intel. The company has a market capitalization of almost $16 billion and a dividend yield near 1.4 percent. This S&P 500 component also has an operating margin that is better than the industry average.

The consensus recommendation of the 23 analysts surveyed by Thomson/First Call remains to hold shares. Their mean price target, or where the analysts expect the share price will go, is lower than the current share price, meaning that they see no further upside at this time.

The share price slipped marginally during the final weeks of September, while the Nasdaq retreated more than 5 percent. The stock has not only outperformed the broader markets over the past six months, but competitors Linear Technology and Xilinx as well.

Marvell Technology

The number of shares sold short in this company exploded more than 169 percent to around 14.85 million shares in the two weeks. That was more than 3 percent of the float, and it ended four straight periods of shrinking short interest.

Marvell is looking to restructuring efforts to help it stay afloat. The company's market cap is now less than $5 billion, and the dividend yield is about 2.6 percent. Note that the return on equity and operating margin are both in the red.

The consensus recommendation of the analysts polled is to hold shares, as it has been for at least three months. Yet, a move their mean price target would be about a 15 percent gain for the shares. The stock did trade higher than that target last month.

The share price ended the settlement period more than 4 percent higher, though it was up more than 10 percent at one point. Over the past six months, the stock has underperformed both the broader markets and competitors such as Analog Devices and STMicroelectronics.

Skyworks Solutions

Short interest in this Massachusetts-based integrated circuit maker grew more than 12 percent to more than 12.41 million shares in the period. That was more than 6 percent of the float, as well as more than double the number of shares short back in June. The days to cover was almost four.

This Apple supplier could have a good 2016. The company has a market cap near $15 billion and a dividend yield of about 1.3 percent. This S&P 500 component also has an operating margin that is better than the industry average and a return on equity of more than 26 percent.

Of the 24 analysts polled, 20 of them recommend buying Skyworks shares. They believe the shares have plenty of room to run, as their mean price target is about 31 percent higher than the current share price. That consensus target would be a multiyear high for the shares.

The share price ended the two-week period down more than 7 percent, and it has pulled back about another 5 percent since. The stock has underperformed the broader markets over the past six months, but it outperformed smaller competitor Qorvo.

See also: Short Selling: Karl Loomes Picks The Six Hottest U.S.-Listed Stocks

And Others

The number of shares short in Analog Devices, Applied Materials, ARM Holdings, Avago Technologies, Lam Research, Linear Technology, Micron Technology, NVIDIA, NXP Semiconductors and Texas Instruments also swelled in the latter weeks of September.

Short sellers withdrew somewhat from Broadcom, Intel, Maxim Integrated Products, Microchip Technology, Qualcomm and Xilinx in the period, but especially from Qorvo. The number of its shares short shrank by more than 26 percent.

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

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Posted-In: altera Marvell Technology Qorvo Skyworks SolutionsShort Ideas Trading Ideas Best of Benzinga


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