Rebound Potential: 4 Companies Hitting New Lows on Increased Short Selling

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There are always two sides to a short: a sale today, and a purchase in the future.

Below we present 4 companies that are trading near their 52-week lows. These companies have also seen steep increases in the number of shares shorted month-over-month.

Eventually these short positions will be covered, increasing buying pressure and reversing some of the loss from the short selling. Do you think that time is near for these companies?

Use this list as a starting-off point for your own analysis into rebound candidates.

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1. Access a thorough description of all companies mentioned

2. Compare analyst ratings for all stocks mentioned below 

3. Visualize market cap changes for the top stocks mentioned

List sorted by increase in shares shorted.

1. Flagstone Reinsurance Holdings SA (FSR): Property & Casualty Insurance Industry. Market cap of $582.44M. The stock is currently trading 2.23% above its 52-week low. Shares shorted have increased 36.24% month-over-month (from 1.49M to 2.03M shares shorted). FSR has a relatively low correlation to the market (beta = 0.6), which may be appealing to risk-averse investors. The stock might be undervalued at current levels, with a PEG ratio at 0.68, and P/FCF ratio at 2.34. The stock is currently stuck in a downtrend, trading 6.21% below its SMA20, 19.45% below its SMA50, and 24.48% below its SMA200. It's been a rough couple of days for the stock, losing 6.07% over the last week.(View investor sentiment on FSR)

2. Ormat Technologies Inc. (ORA): Electric Utilities Industry. Market cap of $1.15B. The stock is currently trading 9.29% above its 52-week low. Shares shorted have increased 19.58% month-over-month (from 1.43M to 1.71M shares shorted). The stock is a short squeeze candidate, with a short float at 9.55% (equivalent to 8.18 days of average volume). The stock has lost 15.55% over the last year.(View investor sentiment on ORA)

3. Longtop Financial Technologies Limited (LFT): Business Software & Services Industry. Market cap of $1.62B. The stock is currently trading 6.57% above its 52-week low. Shares shorted have increased 19.26% month-over-month (from 7.79M to 9.29M shares shorted). Short float at 19.42% (equivalent to 11.18 days of average volume), indicating the stock is a short squeeze candidate. The stock is currently stuck in a downtrend, trading 9.92% below its SMA20, 10.04% below its SMA50, and 19.97% below its SMA200. It's been a rough couple of days for the stock, losing 10.89% over the last week.(View investor sentiment on LFT)

4. Platinum Underwriters Holdings Ltd. (PTP): Property & Casualty Insurance Industry. Market cap of $1.38B. The stock is currently trading 6.05% above its 52-week low. Shares shorted have increased 18.26% month-over-month (from 1.15M to 1.36M shares shorted). Risk-averse investors may appreciate that PTP has a relatively low correlation to the market (beta = 0.61). The stock has gained 3.2% over the last year.(View investor sentiment on PTP)

Shares shorted data sourced from Yahoo! Finance (Note: Current month for share shorted is month ended Mar. 31, 2011), all other data sourced from Finviz. Data collected on April 18.



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

Referenced Stocks: FSR , LFT , ORA , PTP

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