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
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%
Disclosure: Long GE, C, NOK.