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It's been a strong year for
Banco de Chile(BCH - Get Report), another foreign banking stock that's boasting a hefty short interest ratio right now. Shares have rallied more than 13.7% in the last 12 months, returns that look even more impressive when they're compared to the 21.6% decline that the financial sector has posted over that same period.
The Latin American banking sector has been heating up for the past several years, and BCH has been a big beneficiary. The firm dramatically increased its top and bottom lines during the recession, an impressive feat given the fact that the financial crisis had a worldwide reach. Comparatively higher rates in the Chilean market mean that BCH is able to collect some impressive margins on its banking business -- more than 31% in the firm's latest quarter.
Again, here's a case where a high dividend and currency exposure are fuelling shorts. The firm's 3.79% payout is based on earnings in Chilean pesos, another currency with a checkered past that looks less attractive given the dollar's recent strength. That said, Chile boasts a very different banking industry than ours here at home, and many investors are welcoming the peso exposure.
The firm's short ratio of 11.2 makes it a solid short candidate for 2012.
To see this week's short squeezes in action, check out the
Blue Chip Short Squeeze portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.