Investing 101: S&P 500 Stocks with Bearish Short Trends

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(List compiled by Becca Lipman)

The Standard & Poor’s 500 index is the most commonly referred to index for determining the performance of the US stock market. The stocks on the index are carefully chosen and often serve as representatives of their respected industries.

When stocks on the S&P 500 increase or decrease in value, it is more likely that their industry will follow suit. 

Many analysts pay close attention to the S&P, and for that reason we chose to list the stocks on the index that have been experiencing an increase in short selling over the past month – a bearish indicator that short sellers think the stock values will drop.  

Want more information on these terms? You got it: 

The Standard & Poor’s 500 Index (S&P 500) refers to 500 companies that have common stock traded in the US stock market. They are all large cap companies that serve as representatives of their industries in the US economy. It is one of the most commonly used benchmarks for the health of the stock market. Standard & Poor’s committee of analysts and economists has carefully chosen each stock on this list. 

Short selling is an investment technique that allows an investor to make money when the value of a stock falls. Short sellers, however, lose money when the share price rises. And because share prices could rise to infinity, a reckless short position could lead to incredibly large losses. Because short selling requires borrowing, an individual or institution must meet several requirements (including background checks) to engage in short selling. Thus, short sellers are seen as more sophisticated than the average investor.

In general: When there is an INCREASE in short selling, short sellers seem to think the names will DROP in value. When there is an DECREASE in short selling, short sellers seem to think the names will RISE in value.

Without further ado, a list of S&P 500 companies with the greatest increase in short selling. Short sellers think these stocks are in trouble, do you agree?

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List sorted by percent of change in short seller activity.

1. Cerner Corporation (CERN): Healthcare Information Services Industry. Market cap of $10.94B. Current price at $64.16. Shares shorted in the recent month at 16.35M, an increase from the previous month's 8.25M shares. This represents 5.69% of the company's share float. The stock is a short squeeze candidate, with a short float at 11.52% (equivalent to 14.01 days of average volume). The stock has had a couple of great days, gaining 5.09% over the last week.

2. J. C. Penney Company, Inc. (JCP): Department Stores Industry. Market cap of $6.70B. Current price at $31.24. Shares shorted in the recent month at 28.26M, an increase from the previous month's 23.01M shares. This represents a 3.64% of the company's share float. The stock is currently stuck in a downtrend, trading -5.19% below its SMA20, -7.79% below its SMA50, and -7.54% below its SMA200. The stock has gained 28.45% over the last year.

3. Advanced Micro Devices, Inc. (AMD): Semiconductor Industry. Market cap of $5.33B. Current price at $7.61. Shares shorted in the recent month at 83.57M, an increase from the previous month's 68.98M shares. This represents a 2.52% of the company's share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.19). The stock has had a couple of great days, gaining 20.53% over the last week.

4. Best Buy Co. Inc. (BBY): Electronics Stores Industry. Market cap of $11.05B. Current price at $29.33. Shares shorted in the recent month at 41.95M, an increase from the previous month's 35.39M shares. This represents a 2.18% of the company's share float. The stock is a short squeeze candidate, with a short float at 14.01% (equivalent to 5.98 days of average volume). The stock has lost 15.93% over the last year.

5. Teradata Corporation (TDC): Diversified Computer Systems Industry. Market cap of $9.67B. Current price at $56.99. Shares shorted in the recent month at 5.75M, an increase from the previous month's 3.00M shares. This represents a 1.64% of the company's share float. The stock has gained 73.76% over the last year

6. MEMC Electronic Materials Inc. (WFR): Semiconductor Industry. Market cap of $1.86B. Current price at $8.22. Shares shorted in the recent month at 15.17M, an increase from the previous month's 11.44M shares. This represents a 1.62% of the company's share float. The stock has had a couple of great days, gaining 5.91% over the last week.

7. Nicor Inc. (GAS): Gas Utilities Industry. Market cap of $2.55B. Current price at $55.85. Shares shorted in the recent month at 2.36M, an increase from the previous month's 1.69M shares. This represents a 1.49% of the company's share float. The stock is a short squeeze candidate, with a short float at 5.24% (equivalent to 8.23 days of average volume). The stock has gained 32.76% over the last year.

8. Quest Diagnostics Inc. (DGX): Medical Laboratories & Research Industry. Market cap of $8.97B. Current price at $56.24. Shares shorted in the recent month at 6.59M, an increase from the previous month's 4.38M shares. This represents a 1.42% of the company's share float. The stock has gained 28.38% over the last year.

9. AutoNation Inc. (AN): Auto Dealerships Industry. Market cap of $5.78B. Current price at $39.39. Shares shorted in the recent month at 12.76M, an increase from the previous month's 12.12M shares. This represents a 1.26% of the company's share float. The stock is a short squeeze candidate, with a short float at 10.08% (equivalent to 14.1 days of average volume). The stock has had a good month, gaining 11.43%.

10. Tyson Foods Inc. (TSN): Meat Products Industry. Market cap of $6.93B. Current price at $18.01. Shares shorted in the recent month at 21.98M, an increase from the previous month's 18.44M shares. This represents a 1.17% of the company's share float. The stock has gained 2.47% over the last year.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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