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Chilean air carrier
Lan Airlines(LFL) is one heavily shorted foreign name that's actually having a strong year in 2012. Shares of the firm have rallied close to 12% since the first trading day of January, price action that's got to be painful for short sellers right now. With a short interest ratio of 11.1, it would take shorts more than two weeks to exit their positions at current volume levels.
The airline won't be called Lan for long. Following a merger with Brazil's
TAM (TAM) that closed on Friday, the combined firm will be called LATAM and will begin trading under that name on the
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Lan is the flag carrier for Chile, positioning that gives the firm advantages over others in its homebase. Size gives the combined LATAM group other advantages -- the merger makes LATAM the biggest carrier in Latin America and should provide the combined firms with as much as $700 million in cost savings annually.
Lan has been a perennial short target for U.S. investors in the past year or two. Lower costs and a bigger footprint should help to shake out the week hands once the combined firm starts trading.