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The following is a list of stocks under $5 that have seen a sharp increase in shares shorted over the last three months.

To create the list, we started with a universe of about 150 stocks with prices below $5.00. We then narrowed down the list to only focus on those companies that have seen a significant increase in shares shorted between 9/30 - 12/31.

Is this growing pessimism justified, or will short covering provide support to these names? What do you think? Full details below.

Short trends data sourced from AOL Money, moving average and current short float data sourced from Finviz. Note that all short trends described occurred between 9/30 and 12/31.

Interactive Chart: Press Play to compare changes in market cap for the top stocks mentioned below. Note: The numbers on top of items represent the forward P/E ratio, if available.



The list has been sorted by the change in shares shorted between 9/30 - 12/31.

1. Northgate Minerals Corp. (NXG): Gold Industry. Market cap of $809.2M. Price at $2.80. Shares shorted have increased from 1.3M to 10.9M over the last three months. Short float at 3.57%, which implies a short ratio of 2.9 days. The stock has lost -16.52% over the last year.

2. Corcept Therapeutics Inc. (NASDAQ:CORT): Biotechnology Industry. Market cap of $315.58M. Price at $4.31. Shares shorted have increased from 1.0M to 2.5M over the last three months. Short float at 2.84%, which implies a short ratio of 4.97 days. The stock has gained 45.33% over the last year.

3. Lloyds Banking Group plc (NYSE:LYG): Foreign Money Center Banks Industry. Market cap of $73.27B. Price at $4.41. Shares shorted have increased from 1.1M to 1.9M over the last three months. Short float at 0.04%, which implies a short ratio of 0.44 days. The stock has gained 13.16% over the last year.

4. Quantum Corp. (NYSE:QTM): Data Storage Devices Industry. Market cap of $839.8M. Price at $3.80. Shares shorted have increased from 7.4M to 12.7M over the last three months. Short float at 5.72%, which implies a short ratio of 2.89 days. The stock has gained 30.14% over the last year.

5. China Security & Surveillance Technology, Inc. (NYSE:CSR): Security & Protection Services Industry. Market cap of $434.84M. Price at $4.89. Shares shorted have increased from 4.9M to 8.1M over the last three months. Short float at 11.36%, which implies a short ratio of 6.92 days. The stock has lost -44.15% over the last year.

6. Dynavax Technologies Corporation (NASDAQ:DVAX): Drug Manufacturer. Market cap of $383.73M. Price at $3.31. Shares shorted have increased from 2.5M to 4.0M over the last three months. Short float at 1.78%, which implies a short ratio of 1.86 days. The stock has gained 112.82% over the last year.

7. Ivanhoe Energy Inc. (NASDAQ:IVAN): Independent Oil & Gas Industry. Market cap of $1.06B. Price at $3.13. Shares shorted have increased from 2.0M to 3.2M over the last three months. Short float at 1.04%, which implies a short ratio of 2.2 days. The stock has gained 4.28% over the last year.

8. Sprint Nextel Corp. (NYSE:S):
Wireless Communications Industry. Market cap of $13.38B. Price at $4.44. Shares shorted have increased from 87.9M to 129.5M over the last three months. Short float at 4.46%, which implies a short ratio of 2.5 days. The stock has gained 21.41% over the last year.

9. Standard Pacific Corp. (NYSE:SPF):
Residential Construction Industry. Market cap of $516.61M. Price at $4.88. Shares shorted have increased from 11.3M to 16.6M over the last three months. Short float at 15.46%, which implies a short ratio of 7.93 days. The stock has gained 20.5% over the last year.

10. Tower Semiconductor Ltd. (NASDAQ:TSEM): Semiconductor Industry. Market cap of $345.15M. Price at $1.51. Shares shorted have increased from 1.2M to 1.8M over the last three months. Short float at 0.94%, which implies a short ratio of 2.6 days. The stock has gained 28.7% over the last year.

11. Avanir Pharmaceuticals (NASDAQ:AVNR): Drug Manufacturer. Market cap of $541.76M. Price at $4.42. Shares shorted have increased from 12.1M to 15.2M over the last three months. Short float at 14.76%, which implies a short ratio of 2.89 days. The stock has gained 117.56% over the last year.

12. Crown Media Holdings Inc. (NASDAQ:CRWN): CATV Systems Industry. Market cap of $906.39M. Price at $2.51. Shares shorted have increased from 3.6M to 4.4M over the last three months. Short float at 14.88%, which implies a short ratio of 33.96 days. The stock has gained 68% over the last year.

13. SIRIUS XM Radio Inc. (NASDAQ:SIRI):
Broadcasting Industry. Market cap of $6.01B. Price at $1.56. Shares shorted have increased from 176.9M to 213.1M over the last three months. Short float at 5.79%, which implies a short ratio of 4.14 days. The stock has gained 125% over the last year.

14. Hercules Offshore, Inc. (NASDAQ:HERO)
: Oil & Gas Drilling & Exploration Industry. Market cap of $392.55M. Price at $3.37. Shares shorted have increased from 6.8M to 7.8M over the last three months. Short float at 6.77%, which implies a short ratio of 2.65 days. The stock has lost -36.43% over the last year.

15. Polymet Mining Corp. (NYSEMKT:PLM):
Industrial Metals & Minerals Industry. Market cap of $343.69M. Price at $2.30. Shares shorted have increased from 2.4M to 2.7M over the last three months. Short float at 2.3%, which implies a short ratio of 4.44 days. The stock has lost -38.83% over the last year.

16. Abraxas Petroleum Corp. (NASDAQ:AXAS): Independent Oil & Gas Industry. Market cap of $342.23M. Price at $4.50. Shares shorted have increased from 4.5M to 5.0M over the last three months. Short float at 6.93%, which implies a short ratio of 7.83 days. The stock has gained 81.38% over the last year.

17. Parker Drilling Co. (NYSE:PKD):
Oil & Gas Drilling & Exploration Industry. Market cap of $511.37M. Price at $4.32. Shares shorted have increased from 5.0M to 5.5M over the last three months. Short float at 5.24%, which implies a short ratio of 8.96 days. The stock has lost -19.85% over the last year.

18. Paramount Gold and Silver Corp. (NYSEMKT:PZG): Industrial Metals & Minerals Industry. Market cap of $493.98M. Price at $3.60. Shares shorted have increased from 1.7M to 1.9M over the last three months. Short float at 1.65%, which implies a short ratio of 1.07 days. The stock has gained 91.79% over the last year.

19. Augusta Resource Corp. (NYSEMKT:AZC): Industrial Metals & Minerals Industry. Market cap of $542.42M. Price at $4.00. Shares shorted have increased from 1.0M to 1.1M over the last three months. Short float at 1.43%, which implies a short ratio of 3.42 days. The stock has gained 62% over the last year.

20. PMI Group Inc. (PMI): Surety & Title Insurance Industry. Market cap of $628.56M. Price at $4.05. Shares shorted have increased from 23.8M to 25.8M over the last three months. Short float at 17.04%, which implies a short ratio of 4.9 days. The stock has gained 50.58% over the last year.

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

Source: 20 Short Seller Targets Under $5