Stocks with the Largest Short Positions

Below is a list of the largest short positions for the month of January. I believe upon closer examination, if you believe a stimulus rally is coming in the near term, and you have cash on the sidelines, a move into GE, C, and Nokia (NOK) might not be a bad call (full disclosure: author owns all 3 positions).

The reason I like GE comes from its diversification. Whether it is its exposure to jet engines, media, healthcare, or nuclear plants, any stimulus gains will trickle down to its bottom line. Moreover, when you are being paid an 8% yield to wait and half of its 2009 debt financing already sold, I think there is huge potential to the upside for those who can afford to wait for the short squeezers to give up.

Citigroup is simply an option on the financials turning the corner. I don't mind it at these levels as it is too big to fail and if it moves forward with its plan to dump all its bad assets into a spinoff called Citfinancial, and all the valuable retail banking business in a Citibank spinoff, you might find the end product being a huge winner if the last stimulus package works to get the USA out of this recession.

In regard to Nokia, this is the largest mobile phone company in the world, regardless of RIM (RIMM) or iPhone market share gains. Europeans buy their cell phones and infrastructure products at a large enough rate that Nokia holds over 30% of the world market share. Plus, you will be able to pick up a nice 5% yield while you wait on the shorts to feel the squeeze.

Lastly, I would avoid Pfizer (PFE) as this stock will likely see a rise in short interest as we get closer to the closing of the Wyeth (WYE) takeover. The hedge funds are simply long Wyeth on hopes of a counter bid, while short Pfizer as a perfect hedge in case of the deal closing. This way it will simply cover the short when the transaction closes, as they will receive 1 share of Pfizer for each share of Wyeth they own, and pocket the cash/arb on the close. This deal will certainly go through, unlike BCE, because Pfizer would never have gone forward unless it was certain the banks were going to be there with the money.

The five companies with the largest overall short positions are also listed.
COMPANY JAN 30, 2009 JAN 15, 2009 NET CHANGE PCT CHANGE
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FIVE BIGGEST INCREASES:

• General Electric Co 167,972,565 142,508,373 25,464,192 17.87%
• Citigroup Inc 180,983,983 162,793,089 18,190,894 11.17%
• Banco Santander S.A. (STD) 32,658,235 19,383,491 13,274,744 68.48%
• Pfizer Inc 89,402,555 78,153,592 11,248,963 14.39%
• New York Community (NYB) 28,781,736 18,439,584 10,342,152 56.09%

FIVE BIGGEST DECREASES:

• Nokia Corp 18,552,903 38,313,687 -19,760,784 -51.58%
• Wells Fargo & Co (WFC) 111,677,537 125,872,995 -14,195,458 -11.28%
• Wal-Mart Stores (WMT) 40,345,362 50,760,650 -10,415,288 -20.52%
• Johnson & Johnson (JNJ) 25,595,022 33,671,605 -8,076,583 -23.99%
• EMC Corp (EMC) 45,809,727 53,372,969 -7,563,242 -14.17%

FIVE BIGGEST POSITIONS:

• Ford Motor Co (F) 273,286,779 270,453,510 2,833,269 1.05%
• Citigroup 180,983,983 162,793,089 18,190,894 11.17%
• General Electric 167,972,565 142,508,373 25,464,192 17.87%
• AIG (AIG) 128,659,009 131,310,541 -2,651,532 -2.02%
• Wells Fargo & Co 111,677,537 125,872,995 -14,195,458 -11.28%

Source: NYSE.

Disclosure: Long GE, C, NOK.

Comments

[win:]

Thank you, very helpful. Now another article with top ten in terms of actual percent short interest would be super helpful.

Feb 15 08:28 AM

[gtmcduffy@g...:]

As for your "5 Biggest Positions": you are referring to those stocks with the "most" shares short - but it would be helpful to also have a list of the 5 Biggest Short Ratios (or % of Float).

Feb 15 09:14 AM

[Crude Oil T...:]

I hate to see anyone buying stocks right now on fundamentals, even shorting statistics. The reason the market is trading so thin right now is that all professionals know this market is going lower. Don't buy any of these names until you see the SP 500 in the 650-680 range. We may go a lot lower then that.



stock-market-club.blog...

Feb 15 09:19 AM

[hardymaine:]

it will be interesting to see if the shorts can convince the market that the bad news isn't priced in as the earings estimate has only come down 2.0% in the last 60 days but the price has come down 16.5%.

Feb 15 10:53 AM

[hardymaine:]

With respect to WMT, it will be interesting to see if the shorts can convince the market that the bad news isn't already priced in as the earning estimate has only come down 2% in the last 60 days but the price has come down 16.5%.

Feb 15 10:58 AM

[Duke Wong:]

Last December, I tried to short GM and F but there are no available stocks for short sale. Does SEC stop the short sale on those stocks? Does any one know?

Feb 15 11:12 AM

[James Wilson:]

You have to wornder where all that stock is comming from to Short Citi.

Is it Citi shorting Citi ?

Feb 15 11:47 AM

[Ron Hurst:]

I can't waite for the "shorts" to start covering their positions! GE will soar!

Feb 15 11:58 AM

[wilpal:]

What about DRYS Short Positions last MONTH was good or bad?

Feb 15 02:41 PM

[siew_wah:]

Hope your prediction comes true on the short positions. Having parked a substantial amount of my retirement funds into C, which Singapore's sovereign wealth fund also invested and lost several billions, the short sellers ought to get squeezed because they had profited too much.

Feb 15 03:27 PM

[Weissass:]

The shorts are betting that Walmart's future earnings will get crushed by Obama's promise to Labor Unions to enact Card Check and other pro-union legislation. If Unions infect Walmart's low cost business model, WMT may become as sick as the "Big Three" Automakers.

Feb 15 11:16 PM

[bobbobwhite:]

After all has been said and done, there is still one person on the face of this earth recommending GE and C to buy? Where has this person been, in a cave for years? GE stock is at a 15 year low and C at least a 20 year low. Both are almost dead meat with failing business models. GE will survive and stumble along, but C will not.

Neither are buys, ever. This writer must be a paid shill. I know he holds both stocks so is compromised on what he writes. Why not write instead on stocks you do not hold, then you may get a bit of cred you sure won't get this way? Really stupid.

Feb 16 11:57 AM

[Garret H:]

NOK?? Really?? Shorts 0.5% of the float, 1 day to cover. I am long this stock, and I didn't check the others, but price action you see on this guy is not gonna be a short squeeze.

Feb 16 08:03 PM

[pggg:]

the world is coming to an end...this time for real. LOL
Hell, if GE and C fail - we'd all have much bigger things to worry about than losing a few bucks. in a scenario like that, money will be worthless anyway.

Feb 16 10:19 PM

[KJP712:]

Like both GE and C as trading vehicles.

Feb 17 01:02 AM

[Arthur Cutten:]

The approach of buying stocks with the biggest short positions is interesting if you sweat the details of what makes them a buy when the professionals think they are a sell.

You will get a nice rally in them if the market rallies. This is an easy play in a bull market, and an early stage bear market.

However is the teeth of a secular bear, it looks like buying a home in the path of a tsunami.

C is too big to fail? Watch, and be amazed. They will be tossing the common shareholders overboard faster than you can say "Yikes!"

Feb 17 05:39 AM

[zedman:]

As mentioned earlier, look at the daily turnover compared to short interest. C short interest is less than one day's turnover. There are plenty of C shares available to short with or without Citi's own involvement. GE is only just over one day. Compare that to AIG with over 4 days trading volume, or GM which is almost 9 days volume.

Feb 17 09:39 AM

[PROXIMO:]

Good luck with your Citi short. I doubt Citi makes it through the Spring.

Feb 17 06:14 PM