Top Financial Sector Short-Squeeze Plays
James Altucher
12/26/07 - 06:45 AM EST
The stocks in the financial sector have been the hardest hit during the last couple of months. Many of them have also been heavily shorted.
Often a heavily shorted stock proves to be oversold and can spike up especially quickly due to the short-sellers covering their bearish positions on any rise in stock price. The metric used to examine such a potential short squeeze is the short ratio. Also known as the days-to-cover ratio, this is the number of days it would take the short-sellers to cover their positions based on the stock's current trading volume.
Stockpickr has reviewed the financial sector stocks and extracted those with the highest short ratios and compiled them in a portfolio called the
Top Financial Short-Squeezes.
One of the stocks with the highest short ratios is
Consolidated Tomoka Land(CTO Quote), a land sales company with a short ratio of 45.1. In its most recent quarterly report in late October, the Florida-based company reported earnings of 37 cents a share, down from 42 cents in the same quarter last year. The stock has a price-to-earnings (P/E) ratio of 44 and pays a small yield of 0.5%.
Consolidated Tomoka Land is owned by the
Wintergreen Fund, which is run by David Winters and has generated a one-year return of more than 32%. Wintergreen also owns
HSBC Holdings(HBC Quote), which has a short ratio of 1.5,
Weyerhaeuser(WY Quote), with a short ratio of 3.7, and
Reynolds American(RAI Quote), with a 17.7 short ratio.
Another financial stock with a high short ratio is
TrustCo Bank Corp. NY(TRST Quote), which has a short ratio of 34.8. TrustCo Bank also reported a drop in earnings when it posted quarterly results in October.
The bank holding company earned $10.6 million, or 14 cents a share, down from $11.2 million, or 15 cents a share, in the third quarter a year ago. The stock has a P/E of 19 and a yield of 6.6%.
TrustCo Bank also shows up in the
Top Short-Squeeze Bank Stocks, a Stockpickr portfolio that also includes such stocks as
First Commonwealth Financial(FCF Quote), with a short ratio of 18.3,
F.N.B. Corp(FNB Quote), at an 18.2 short ratio, and
First Citizens Banc(FCZA Quote), with a 4.8 short ratio.
Corus Bankshares(CORS Quote) is another stock with a high short ratio, at 32.2. This Chicago-based bank holding company recently completed a 2 million-share repurchase program it launched in April 2004.
A new 5 million-share repurchase program was authorized in late October. The stock has a P/E of 4 and a high yield of 9%.
Corus is owned by
Markel, is an insurance company that is sometimes referred to as a "mini-
Berkshire Hathaway." Markel also owns
Fairfax Financial Holdings(FFH Quote), with a 6.5 short ratio,
CarMax(KMX Quote), with a 10.5 short ratio, and
General Electric(GE Quote), with a short ratio of 1.2.
The see the list of the top financial sector stocks with the highest short ratios, check out the
Top Financial Short-Squeezes at Stockpickr.com.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider Consolidated Tomoka Land to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
