Stockpickr: The Top 10 Battleground Stocks

I like stocks that have "battles" going on. There are two types of investment battles that can create the sharpest rallies: activist investors vs. company management and short-sellers vs. insiders.

Today I'll focus on the latter -- when a lot of investors are betting that a stock will go down, but the insiders of the company are betting that the stock will go up. In such cases, I place my bets with the insiders.

Why? Insiders know what's going on, and they are putting their money where their mouths are. When the shorts have to cover, it creates a squeeze situation, which could cause shares of a company to go up sharply.

At Stockpickr we keep track of the top 10 potential short squeezes -- a list of stocks with high short interest and high insider buying. We update this portfolio every two weeks.

One of the names on the list this week is Avid Technology(AVID Quote), which develops and sells the most commonly used video-editing package in the world. Almost every major motion picture you see has had at least some postproduction editing done on an Avid system.

The short interest ratio on Avid's stock is 10, meaning it would take 10 entire days of pure buying for the short-sellers to completely cover their investments if the stock were to rise. And yet Avid has seen $16 million of insider buying in the past several weeks.