Now that earnings season has started, some of the battles between short sellers and insiders will play out, some may play out dramatically. If the news is good, shorts will get squeezed. If the news is bad, insiders will see their personal wealth reduced. So which stocks are poised to strong moves in either direction?
Here are five stocks where the insiders have been net buying and the short sellers have strong positions - more than 10% of the float is short.
This is a risky play - so do your homework on any of these stocks that you might want to trade into the earnings announcements.
SuperValu (NYSE:SVU) is a food wholesale and retail distributor, operating under the brand names Cub Foods, Farm Fresh, Hornbacher's, Shop 'n Save, Shoppers Food & Pharmacy and Save-A-Lot. They are set to announce earnings on July 17th. The open short position is 28% at last report. With insiders net buying the stock, there is a clearly some difference of opinion that the earnings announcement should help resolve.
Cohen & Steers (NYSE:CNS) is also set to announce on the 17th. CNS is a financial services management company that operations in the US and Japan in the mutual fund, hedge fund and alternative investment strategy areas. The short float is 11%, so not huge but still noteworthy. CNS is trading in the middle of the 52 week range of $26.84 to $44.44.
Cepheid (NASDAQ:CPHD) will announce on July 18th, however they pre-announced some results on the 11th which caused about a 5% drop in price. In this case, the 17% short interest had the call correct. The action here may be over, but it will still be instructive to hear the full results and look for anything that may support the insiders bullish buying.
Select Comfort (SCSS) designs, manufactures and retail sells mattresses in the US and Canada. Currently there is a 11.7% open short position against the company who reports earnings on the 17th. The shorts have been increasing steadily over the last 3 months, up almost 33% since mid April. There is nothing in the news headlines to indicate a movement either way.
Terex (NYSE:TEX), a manufacturer of specialty mobile equipment such as skid steers, aerial lifts and telehandlers under the Terex and Genie brands is set to report on the 22nd. This stock has been battered like many of the mobile equipment OEMs. The open short position is 12.7%. This is relatively high and quite a bit higher than rival Caterpillar (NYSE:CAT) at 3.7%.
Again, getting a trade with strong positions on both sides and an earnings event can be risky and tricky so do your homework before placing a trade on any of these.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.