Short Interest Swells On These 3 Stocks

Activision Blizzard, Inc. (NASDAQ:ATVI), Avago Technologies Ltd (NASDAQ:AVGO), and Sunedison Inc (NYSE:SUNE) short-interest levels are off the charts

by Alex Eppstein

    Published on Oct 1, 2015 at 1:00 PM
    Updated on Oct 1, 2015 at 1:00 PM

    Yesterday, we looked at three biotechs with short-interest levels at 10-year highs. But they're hardly the only ones -- which probably isn't surprising, considering the market's long-term struggles. Today, we'll highlight three more stocks staring at historically significant short interest, including video game maker Activision Blizzard, Inc. (NASDAQ:ATVI), semiconductor firm Avago Technologies Ltd (NASDAQ:AVGO), and solar issue Sunedison Inc (NYSE:SUNE).

    At present, over 58 million ATVI shares are sold short -- the loftiest number in more than a decade. In fact, this figure represents 17.4% of the stock's float, or about seven days of trading activity, at typical volumes. Shorts aren't the only skeptical ones, either. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.58 ranks in the 85th percentile of its annual range, indicating short-term traders are more put-focused than usual.

    This extreme bearish betting is surprising, considering ATVI has soared 53% year-to-date at $30.84, and late last month hit a record peak of $32.50. Should this trend continue, a mass exodus among skeptics could prove a boon to the shares.

    AVGO's short-interest levels are also at levels not seen in over 10 years. At the stock's average trading clip, it would take one week to repurchase the 20.5 million shares sold short. Option traders have likewise been upping the bearish ante. The equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio rests at an annual high of 2.12, with long puts more than doubling calls.

    This, despite Avago Technologies Ltd tacking on over 19% year-to-date to hover just north of $120. From a contrarian perspective, short sellers and option bears could soon throw in the towel -- potentially intensifying buying power.

    Finally, an astounding 94 million SUNE shares are sold short -- or 35.6% of its total float. This negativity stands in stark contrast to the options crowd, where close to four-fifths of analysts consider the security a "buy" or better -- with not a single "sell" in sight. Plus, the equity's consensus 12-month price target of $23.53 more than triples the current perch.

    Brokerages may want to re-think their optimistic positions on Sunedison Inc. The solar concern has plunged almost 64% in 2015 to trade at $7.07. Put differently, the stock may be vulnerable to a round of downgrades and/or price-target cuts.

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