For a look at which stocks the market expects to outperform, look to shares shorted.
Because shorting is a position that profits from a stock's decline, stocks seeing fewer shares shorted are experiencing a more optimistic outlook from the market.
To find the stocks short sellers are bullish on, we ran a screen on large-cap stocks for those with the most significant decreases in shares shorted month-over-month.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.
Do you think short sellers are calling it right? Use this list as a starting point for your own analysis.
List sorted by decrease in shares shorted as a percent of share float.
1. Wynn Resorts Ltd. (NASDAQ:WYNN): Engages in the development, ownership, and operation of destination casino resorts. Market cap of $13.37B. Shares shorted have decreased from 6.84M to 5.05M month-over-month, a change representing 2.28% of the company's 78.57M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.45). The stock is currently stuck in a downtrend, trading 14.78% below its SMA20, 17.75% below its SMA50, and 21.7% below its SMA200. It's been a rough couple of days for the stock, losing 11.39% over the last week.
2. HCP, Inc. (NYSE:HCP): An independent hybrid real estate investment trust. Market cap of $14.72B. Shares shorted have decreased from 30.98M to 25.69M month-over-month, a change representing 1.31% of the company's 405.12M share float. The stock is a short squeeze candidate, with a short float at 6.53% (equivalent to 6.63 days of average volume). The stock has gained 16.12% over the last year.
3. Waste Management, Inc. (NYSE:WM): Provides waste management services to residential, commercial, industrial, and municipal customers in North America. Market cap of $13.95B. Shares shorted have decreased from 31.47M to 27.03M month-over-month, a change representing 1.04% of the company's 426.26M share float. The stock has performed poorly over the last month, losing 12.6%.
*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.