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When considering stocks, it's always helpful to gauge what the rest of the market thinks. One source of sentiment is the number of shares shorted. Companies seeing significant increases in shares shorted are being viewed more negatively, and vice-versa.

We ran a screen on the technology sector for stocks seeing the most significant decreases in shares shorted month-over-month. This indicates that short sellers are becoming less bearish on these stocks.

Why the optimism? To find at least one possible fundamental signal for the bullish sentiment we looked through financials of the 15 companies in our universe for those with strong sales trends, comparing growth in revenue to growth in accounts receivable. Since accounts receivable is the portion of revenue not yet received, and there is no guarantee the money will ever be received, the smaller the portion of revenue made up of receivables, the healthier the company's revenue.

We screened for stocks seeing faster growth in revenue than accounts receivable year-over-year, as well as accounts receivable comprising a smaller portion of current assets over the same time period.

Do you think short sellers are betting on improving top-line growth?

The List

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Use this list as a starting point for your own analysis.

1. Aruba Networks, Inc. (NASDAQ:ARUN): Provides distributed enterprise networks that securely connect local and remote users to corporate information technology resources worldwide.

  • Market cap at $2.34B, most recent closing price at $25.40.
  • Shares shorted have decreased from 20.63M to 18.11M over the last month, a decrease which represents about 2.35% of the company's float of 107.02M shares. Days to cover ratio at 7.4 days.
  • Revenue grew by 21.06% during the most recent quarter ($144.48M vs. $119.35M y/y). Accounts receivable grew by 8.6% during the same time period ($73.02M vs. $67.24M y/y). Receivables, as a percentage of current assets, decreased from 16.08% to 13.41% during the most recent quarter (comparing 3 months ending 2012-10-31 to 3 months ending 2011-10-31).

2. Cavium, Inc. (NASDAQ:CAVM): Designs, develops, and markets semiconductor processors for intelligent and secure networks.

  • Market cap at $1.83B, most recent closing price at $37.07.
  • Shares shorted have decreased from 5.57M to 5.06M over the last month, a decrease which represents about 1.04% of the company's float of 48.86M shares. Days to cover ratio at 4.92 days.
  • Revenue grew by 17.91% during the most recent quarter ($66.37M vs. $56.29M y/y). Accounts receivable grew by -11.28% during the same time period ($33.57M vs. $37.84M y/y). Receivables, as a percentage of current assets, decreased from 24.97% to 20.36% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).

3. CIENA Corp. (NYSE:CIEN): Provides communications networking equipment, software, and services that support the transport, switching, aggregation, and management of voice, video, and data traffic.

  • Market cap at $1.55B, most recent closing price at $15.62.
  • Shares shorted have decreased from 18.68M to 17.28M over the last month, a decrease which represents about 1.64% of the company's float of 85.44M shares. Days to cover ratio at 4.8 days.
  • Revenue grew by 2.21% during the most recent quarter ($465.53M vs. $455.45M y/y). Accounts receivable grew by -16.42% during the same time period ($354.19M vs. $423.76M y/y). Receivables, as a percentage of current assets, decreased from 31.79% to 25.02% during the most recent quarter (comparing 3 months ending 2012-10-31 to 3 months ending 2011-10-31).

4. Ellie Mae, Inc. (NYSE:ELLI): Provides hosting of an electronic mortgage origination network in the United States.

  • Market cap at $516.28M, most recent closing price at $19.53.
  • Shares shorted have decreased from 1.42M to 1.21M over the last month, a decrease which represents about 1.03% of the company's float of 20.36M shares. Days to cover ratio at 1.52 days.
  • Revenue grew by 87.18% during the most recent quarter ($27.46M vs. $14.67M y/y). Accounts receivable grew by 51.72% during the same time period ($11.5M vs. $7.58M y/y). Receivables, as a percentage of current assets, decreased from 25.52% to 10.21% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30).

Short data sourced from Yahoo Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: Business relationship disclosure: Kapitall is a team of analysts. This article was written by Sabina Bhatia, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.

Source: 4 Technology Stocks With Bullish Short Trends