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The stocks listed below are some of the most highly shorted stocks listed on U.S. stock exchanges. One potential problem for shorts is when too many people short the same stock. When a stock is shorted to the point where it becomes an overcrowded trade, it can spark panic buying (a short squeeze). A short squeeze is a big risk for shorts. A small jump in price and/or some good news being released by the company can spark buying by shorts who want to cover their shorts and cut potential losses before other shorts. The past six weeks have been great for shorts in general, as the market has declined, but the momentum almost always turns, and when it does, these could rally. Here some companies that could see a short squeeze:
Felcor Lodging Trust (NYSE:FCH), is trading around $5.15. These shares have a relative strength index of about 29, which indicates the shares are oversold. Felcor is based in Texas and invests primarily in hotel properties. These shares have traded in a range between $3.91 to $8.31 in the last 52 weeks. The 50 day moving average is $6.07 and the 200 day moving average is $6.27.
Why Felcor shares could see a short squeeze: According to the latest data on shortsqueeze.com, there are about 7 million shares short. Based on average volume of just about 900,000 shares traded per day, it would take about 8 days worth of volume to match the number of shares short.
Grubb & Ellis (GBE) is trading for about 43 cents. These shares have a 52 week range of 42 cents and $1.47. The 50 day moving average is 64 cents and the 200 day moving average is also $1.03. These shares are trending lower, and if they trade for below $1 for too long, they could be at risk for delisting from the NYSE. Estimates for GBE are for a loss of about 75 cents per share in 2011 and a loss of 55 cents for 2012. I do not think this company has a good balance sheet and these shares are speculative. The shorts have been right, and if some good news doesn't come soon, it looks like they will continue to be right here.
Why Grubb & Ellis shares could see a short squeeze: According to the latest data on shortsqueeze.com, there are about 2.5 million shares short. Based on average volume of just about 230,000 shares traded per day, it would take about 11 days worth of volume to match the number of shares short. Unless the company announces some good news, I doubt there will be any squeeze, even though short interest is high.
Synovus Financial Corp. (NYSE:SNV) shares are trading at $2.12. Synovus is a regional bank located in Georgia. The 50 day moving average is about $2.44, and the 200 day moving average is about $2.45. Earnings estimates are a loss of 20 cents for 2011, and a profit of 18 cents for 2012. This gives SNV shares a PE ratio of about 13 times forward earnings. The dividend is 4 cents per share per year which is a yield of about 1.9%. Insiders have been buying, see that here: www.insidercow.com/history/company.jsp
Why Synovus shares could see a short squeeze: According to the latest data on shortsqueeze.com, there are about 72 million shares short. Based on average volume of just about 7.2 million shares traded per day, it would take about 10 days worth of volume to match the number of shares short. SNV has been considered a takeover target for a major bank looking to expand and regional banks continue to see a wave of buyout deals. You can read more on that here: www.cnbc.com/id/42787252 I think these shares are cheap enough to start buying now, and I would add more on any further market dips.
Jamba Juice (NASDAQ:JMBA) shares are trading at $2.09. Jamba is a maker and retailer of smoothies and other food products. The 50 day moving average is $2.27 and the 200 day moving average is $2.25. These shares have traded in a range between $1.60 to $2.79 in the last 52 weeks. Earnings estimates indicate a loss of 15 cents per share for 2011.
Why Jamba shares could see a short squeeze: According to the latest data on shortsqueeze.com, there are about 6.2 million shares short. Based on average volume of just about 500,000 shares traded per day, it would take about 12 days worth of volume to match the number of shares short. However, with the company posting loses, it's hard to see a short squeeze unless the company announced very good news that the market did not expect.
Headwaters, Inc. (NYSE:HW), is trading around $2.91. Headwaters is a building products company based in Utah. These shares have traded in a range between $2.63 to $6.41 in the last 52 weeks. The 50 day moving average is $4.49 and the 200 day moving average is $4.46. HW is estimated to lose about 77 cents per share in 2011.
Why Headwaters shares could see a short squeeze: Headwaters makes a number of products that were hard hit in the recession and the housing crisis. Their light building products line includes manufactured stone, shutters, roofing, siding and window products. The recent market downturn has hit companies that have any housing exposure very hard, but the sell-off might be overdone, as these shares have been roughly cut in half in the past few weeks. According to the latest data on shortsqueeze.com, there are about 2.86 million shares short. Based on average volume of just about 470,000 shares traded per day, it would take about 6 days worth of volume to match the number of shares short.
CAMAC Energy, Inc., (NYSEMKT:CAK) shares are trading at $1.35. CAMAC is a independent oil and gas company, based in New York. This stock has declined in the past few months, from about $2.50, to current levels. The 50 day moving average is $1.46 and the 200 day moving average is $2.08. The 52 week range is $1.18 to $4.29. Book value is stated at $1.35. These shares are trading close to 52 week lows and for book value.
Why CAMAC shares could see a short squeeze: According to the latest data on shortsqueeze.com, there are about 5 million shares short. Based on average volume of just about 350,000 shares traded per day, it would take about 14 days worth of volume to match the number of shares short. The shorts may have overdone it here, I think these shares are interesting as a speculative buy at these levels and below.
The data is sourced from Yahoo Finance, Shortsqueeze.com, and Stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes only.
Source: 6 Stocks That Could Pop in a Short Squeeze