Sirius XM Holdings Inc. (NASDAQ: SIRI) is the most shorted stock in America. As of the September 30 settlement date, some 250 million shares were sold short. At first blush, the figure would seem impossibly high for a mid-cap company with modest sales. However, there are several reason Sirius tops the short list.

The first reason Sirius is a favorite of short sellers is its shares outstanding number of 5.7 billion and its float of 2.5 billion. Shares are easy to borrow, and they are also easy to trade. The average volume of Sirius shares traded in a day is more than 38 million. So, shares sold short are about 10% of the float. It only takes six days to cover the short interest, based on typical trading action. That gives traders a great chance to move in and out of their positions.

One of the odd features of Sirius shares is that 53.3% of them are owned by Liberty Media Corp. (NASDAQ: LMCA). That would argue that the company will not change hands. There is very little information that a company controlled by a single shareholder is more likely to be shorted. As a matter of fact, other highly shorted stocks, like AT&T Inc. (NYSE: T), have no controlling shareholders at all.

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Sirius shares exhibit a great deal of price volatility, which is another characteristic some short sellers like. The stock is down 18% in the past year, up 16% in the past two years and flat over the past six months. There is no steady pattern to the stock’s trading activity.

One of the problems Sirius faces as a company, and one that tends to move the stock up and down, is its exposure to large legal judgments. By its nature, public corporations with legal challenges can rise and fall quickly. Sirius is up against issues of the rights it has to programming, particularly music rights. It recently lost a $100 million suit by a band called The Turtles. A court decided Sirius owned them royalties. Investors have to be asking what other actions of this sort may be lurking.

At this point, there is no reason to believe that what short sellers like about Sirius is likely to go away, which means it will remain near or at the top of the most shorted stocks in America.

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