Big Short Interest Changes in Major Cult Stocks (ALU, ABK, BBI, BGP, BRCD, C, DRYS, FRE, FNM, NOK, PALM, PMI, BPOP, RAD, SIRI, S, UNG, VG)June 25, 2010 by Jon C. Ogg
Many traders and investors love the active penny-stocks and low-priced stocks. And betting against low-priced shares is something that expert short sellers frequently do. The short selling from June 15 settlement date looked grossly different on many of these actively traded penny stocks or low-priced shares of these cult stocks. We wanted to track and review the changes in many of these and took a look at Alcatel-Lucent (NYSE: ALU), Ambac Financial Group, Inc. (NYSE: ABK), Blockbuster Inc. (NYSE: BBI), Borders Group, Inc. (NYSE: BGP), Brocade Communications Systems, Inc. (NASDAQ: BRCD), Citigroup, Inc. (NYSE: C), DryShips Inc. (NYSE: DRYS), Federal Home Loan Mortgage Corp. (NYSE: FRE), Federal National Mortgage Association (NYSE: FNM), Nokia Corporation (NYSE: NOK), Palm, Inc. (NASDAQ: PALM), PMI Group, Inc. (NYSE: PMI), Popular, Inc. (NASDAQ: BPOP), Rite Aid Corporation (NYSE: RAD), Sirius XM Radio Inc. (NASDAQ: SIRI), Sprint Nextel Corporation (NYSE: S), United States Natural Gas Fund (NYSE: UNG), and Vonage Holdings Corp. (NYSE: VG).
We have taken a look at the moves and the changes in short interest, and then added in on color on each where applicable.
Alcatel-Lucent (NYSE: ALU) is one that just isn’t going anywhere and is in a perpetual turnaround. And the pressure in Europe which built up probably only added more fuel to the short sellers. This was one of the worst performing of the ADRs during that troubled period. before things stabilized. At June 15 settlement date the short interest was 29,654,276 shares, which is up 8.9% from 27,239,231 on May 28.
Ambac Financial Group, Inc. (NYSE: ABK) is one of the ongoing brands which could vanish. The company has even gone so far as to warn that it could be facing bankruptcy protection. This period was brutal on the stock price as it went from over $1.00 down to under $0.90 and things have been even worse since the June 15 settlement date at Ambac. It may even feel like a mystery that the short interest did not grow. The June 15 short interest was listed as 71,653,753 shares, down by -7.6% from 77,529,115 on May 28.
Blockbuster Inc. (NYSE: BBI) has the two classes of shares, although not for long… It is also trying for a reverse split to keep its shares above the $1.00 NYSE minimum. The selling was mixed here, which is surprising considering how many traders and companies believe it could implode. We have it as one of the brands that could disappear. June 15 “A Shares”: 5,925,502 was up 16% from 5,108,280 on May 28. “B Shares”: 23,666,143 was down -17.2% from 28,588,235 on May 28.
Borders Group, Inc. (NYSE: BGP) is in the doghouse and short sellers believe it could topple into bankruptcy protection. It is yet another one of our brands that may disappear. June 15: 4,193,322 was up 21.3% from 3,457,975 on May 28.
Brocade Communications Systems, Inc. (NASDAQ: BRCD) is still one of our “stocks that could double” per our picks, but the company has to find its footing and may need new blood in order for this to happen. June 15: 18,397,733 was up 5.5% from 17,441,727 on May 28.
Citigroup, Inc. (NYSE: C) is another of our “stocks which could double” and its shares have been bouncing around at all prices with the market. Pershing Square’s Ackman also disclosed how large his stake was. Shorts got more aggressive though. June 15: 497,392,313 shares short was up 14.7% versus 433,618,690 on May 28.
DryShips Inc. (NYSE: DRYS) may have that Greek issue and it may just have that transportation issue. The shorts came out more against it, although it could always be part of those offerings it loves to do from time to time. June 15: 35,894,737 shares was up by +11.4% versus 32,224,218 on May 28.
Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) were two surprises considering the awful woes that have set in after the FHFA is seeking the delisting of the common and preferred shares from NYSE now. These are also still two candidates for a disappearing brand. Federal Home Loan Mortgage Corp. (NYSE: FRE) at June 15 was 51,679,910 shares short, down only -0.3% from 51,840,580 on May 28. Federal National Mortgage Association (NYSE: FNM) at June 15 was 135,468,832 shares short and down only by -0.2% versus the 135,771,853 on May 28.
Nokia Corporation (NYSE: NOK) is another one that the short sellers got right. It has such a small percentage of smartphones that Nokia is becoming more synonymous with poor peoples’ phones. Its earnings took shares down hard, so short sellers cleaned house here against the Finns. June 15: 81,384,713 shares short was up over 27% versus 63,888,089 on May 28.
Palm, Inc. (NASDAQ: PALM) is probably just arbitrage bets and other shorters covering now that it is being acquired. Palm’s June 15 short interest was 26,680,444 shares, which is down by -14.2% from the 31,109,807 on May 28.
PMI Group, Inc. (NYSE: PMI), the company that borrowers love to hate, was 21,671,711 shares in the short interest on the June 15 settlement date versus 17,975,874 on May 28.
Popular, Inc. (NASDAQ: BPOP) has become much more actively traded than in months before due to that large offering it had. Much of this change may be covering of bets and exiting arbitrage spreads for those traders. At June 15 its short interest was listed as 19,168,645 shares, down almost 25% from the 25,518,384 on May 28.
Rite Aid Corporation (NYSE: RAD) is another one of the “stocks which could still potentially double” per our picks, but the company is severely hamstrung and the new blood that has been brought in only just recently saw it post a narrower loss than expected. June 15 short interest was 23,654,512 shares, up 14.2% from the 20,718,870 listed by NYSE on May 28.
Sirius XM Radio Inc. (NASDAQ: SIRI) is a perpetual tug of war between short sellers who believe it can implode and those who want to see it recover to its glory days. The June 15 short interest was a whopping 227,767,942 shares, up 6.2% from the 214,514,322 counted on May 28.
Sprint Nextel Corporation (NYSE: S) saw many shorts exit here as it has the only real 4G phone per the news. The problem is that the news is very mixed over how well these are really selling. Still, short sellers decided that maybe they should not be in the fight. June 15: 72,613,518 shares in the short interest is high, but that is down a sharp 27.8% from the 100,520,184 shares short on May 28.
United States Natural Gas Fund (NYSE: UNG) is the ETF that traders probably hate more than any other energy commodity ETF product because of the tracking errors and roll-dates that many believe take this one gradually down closer to ZERO… Interestingly enough, the June 15 short interest was 10,833,137 shares, which was actually down by -5.9% from the 11,512,906 counted on May 28.
Vonage Holdings Corp. (NYSE: VG) is another highly controversial low-priced stock that has millions of customers and has historically seen many traders and investors bet against its survival. The short interest here is muted compared to the past, and the stock was actually hitting 52-week highs recently. The June 15 short interest was 2,605,495 shares, down by -8.7% from the 2,852,429 shares counted on May 28.
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JON C. OGG