3 Stocks Proving Short Sellers Wrong

Among the stocks seeing huge increases in short interest recently are Chipotle Mexican Grill, Inc. (CMG), Google Inc (GOOGL), and Teva Pharmaceutical Industries Ltd (ADR) (TEVA)

Aug 13, 2015 at 10:14 AM
facebook twitter linkedin


Short interest is a key sentiment indicator that helps gauge pessimism toward a particular stock. When a speculator shorts a stock, he sells shares borrowed from a broker, in the hopes that the price will drop -- allowing him to buy back (and return) the borrowed shares on the cheap.

As contrarians, we like to look for outperforming stocks with high levels of short interest, as this represents potential pent-up buying power. Among the notable names seeing huge percentage increases in short interest lately are burrito chain Chipotle Mexican Grill, Inc. (NYSE:CMG), Internet mogul Google Inc (NASDAQ:GOOGL), and drugmaker Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). Below, you'll find a list of the 50 stocks that saw the biggest increases in short interest during the most recent reporting period, followed by a closer look at CMG, GOOGL, and TEVA.

150813shortinterestincreases

Short interest on CMG shot 50.5% higher during the most recent two-week reporting period -- a time frame during which the shares rallied over 12%, on the back of an earnings beat. That the stock could muscle north in the face of this selling pressure is a testament to its underlying technical strength. Last week, CMG touched a record high of $758.61, and was last seen at $747.91. Should short sellers jump ship, the security stands to benefit.

On a similar note, GOOGL short interest spiked 28.5% during the latest reporting period. Over those two weeks, the stock picked up 12.6%, en route to an all-time peak of $713.33. With the shares at $683.20 -- just 4.4% from their high -- short sellers may be reconsidering the wisdom of betting against the long-term outperformer.

Finally, short interest on TEVA popped nearly 47% during the latest reporting period. The negativity is surprising, given that the stock has rallied over 21% year-to-date at $69.80. In fact, even as short bets were mounting in late July, the shares touched a record high of $72.31. Should short sellers throw in the towel -- and join analysts in the bullish camp -- TEVA could get a boost.
 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Master Portfolio Trial
 


 


 
Special Offers from Schaeffer's Trading Partners