This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

LED Stock Losers: The Shorts Own Veeco

Stocks in this article: VECO AIXG CREE

NEW YORK ( TheStreet) -- Any investor following the recent fortunes of stocks in the LED lighting sector hasn't been reading much good news about the industry or seen promising recent stock action in three prominent LED plays -- Veeco Instruments (VECO), Cree (CREE) and Aixtron (AIXG).

Short activity in all three stocks has increased in recent weeks as the news flow turned negative on the sector -- and in the case of Veeco specifically, shorts are owning the stock in Thursday trading, possibly as a result of the latest negative news item, a report from Digitimes that Chinese officials are concerned about overheating in the LED sector.

Veeco shares are down roughly 5% on Thursday afternoon, yet trading volume was average for the LED stock. Analysts covering the stock say the light volume, but significant stock decline, is the classic sign of a stock that has not just come under short pressure, but come under short pressure at a time when the long bets have abandoned the stock.

That's certainly been a problem for LED stocks in general, with few signals of long-term bullish trading and increasing short interest week after week.

The latest short interest data from the Nasdaq details an increase in bearishness on the LED lighting stocks, with Cree bearishness being the most intensified. It's notable that for all three LED stocks, short interest is at its highest level in more than a year. The Nasdaq short interest data is two weeks trailing, so the short interest on Cree, Veeco and Aixtron released by the Nasdaq this week is as of Aug. 31.

Cree short interest jumped from 11.5 million shares to more than 15 million shares in the two weeks ended Aug. 31. The 11.5 million short positions on Cree two weeks ago was the previous high for the past one year period, and so, the four million additional shorts added in the most recent two week Nasdaq period is notable.

Veeco short interest increased by more than 2 million shares as of Aug. 31. The increase in short interest in Veeco shares has been steady, as had been the rise of the LED stocks until the recent crash. There was only short interest on 1.6 million Veeco shares in August 2009, and at the end of August 2010, short interest had climbed to just short of 13 million shares.

Both Cree and Veeco short interest has increased considerably, even as average daily trading volume was significantly lower in both LED stocks in the most recent two week period.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs