3 Stocks At Risk This Week

GoPro Inc (NASDAQ:GPRO), FireEye Inc (NASDAQ:FEYE), and Kinder Morgan Inc (NYSE:KMI) could be vulnerable to end-of-quarter window dressing

Dec 28, 2015 at 12:08 PM
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Earlier this year, Schaeffer's Senior Quantitative Analyst Rocky White explained how "window dressing" can move stocks at the end of the quarter. By buying outperforming stocks and selling underperformers, fund managers can spruce up their portfolios before they need to divulge their holdings. Among the worst-performing stocks of the past six months -- meaning they could be vulnerable to extra selling pressure this week -- are mobile camera maker GoPro Inc (NASDAQ:GPRO), cybersecurity firm FireEye Inc (NASDAQ:FEYE), and energy issue Kinder Morgan Inc (NYSE:KMI). For the best second-half performers that could benefit this week, click here.

Below are the 25 worst stocks over the last six months, per White. To make the list, the stocks had to be above $10 on Thursday, Dec. 24, and had to trade at least 1 million shares per day over the past month, or trade weekly options:


GPRO has been abysmal over the past six months. Since flirting with $65 in mid-August, the stock has surrendered roughly 72%, and now sits at $18.22. The shares hit a record low of $15.90 on Dec. 14, and are now bumping up against their descending 30-day moving average.

As such, nearly half of GPRO's total available float is dedicated to short interest, representing more than four days' worth of pent-up buying demand, at the equity's average pace of trading. However, some of these bears may have hedged their positions with out-of-the-money calls of late.

On the flip side, more than half of the analysts following GoPro Inc (NASDAQ:GPRO) maintain "buy" or better opinions. Plus, the average 12-month price target of $32.24 stands at a premium of 77% to GPRO's current price. Should the security extend its downward trajectory -- or should holiday sales disappoint, unlike this mobile electronics concern -- an unwinding of optimism among analysts could exacerbate selling pressure.

It's a similar story for FEYE, which has shed nearly 62% since peaking at an annual high of $55.33 in mid-June. The stock has been pressured lower beneath its 20- and 30-day trendlines, and now sits at $21.15 -- just three weeks after touching an all-time low of $19.76. In addition, the $22-$24 region emerged as a roadblock following an early November bear gap.

Although Citigroup recently waxed optimistic on FEYE's fundamental prospects, 13 out of 22 analysts offer up lukewarm "hold" ratings. Meanwhile, despite depleting by nearly 24% during the past two reporting periods, short interest still accounts for 12% of FEYE's total available float, which would take more than four days to repurchase, at the equity's average daily trading volume. 

As with GPRO, FEYE shorts could be in hedge mode. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 7.56 stands higher than 95% of all other readings from the past year. In other words, option buyers have picked up FireEye Inc (NASDAQ:FEYE) calls over puts at a much faster-than-usual clip during the past two weeks.

Finally, KMI is just one of a handful of energy names on the list. The stock tagged a record high of $44.71 in late April, but has since gone the way of oil, dropping 66% to sit at $15.24. The shares touched a record low of $14.22 just last week, and are down another 5.2% today, as oil resumes its longer-term downtrend. 

Short interest represents a paltry 3% of KMI's total float, yet the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 2.45 stand higher than 71% of all other readings from the past year. Should "vanilla" option bulls hit the exits, KMI could face additional headwinds.

In the same vein, eight of 14 analysts following Kinder Morgan Inc (NYSE:KMI) maintain "buy" or better endorsements, and the consensus 12-month price target of $21.60 implies expected upside of almost 42% to KMI's current price. Should optimism wane in the analyst community, a round of downgrades and/or price-target cuts could drag KMI even lower.

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