Each month I write a column on the latest potential short squeezes. At Stockpickr, we identify stocks that exhibit both high short interest and a high rate of insider-buying. These stocks are compiled in the Short Squeeze portfolio.
Put simply, a stock with high short interest has a lot of people betting the stock price will go down. If the stock starts to move up, then all of those people who are short the stock have to buy shares to cover their losses. This creates a squeeze.
The stocks on the list we compile, however, also show extensive insider-buying. In other words, the CEO or other people intimately familiar with the company are buying the stock.
So I ask, who knows more? The CEO and other insiders, or the random daytraders betting against the company?Last month's