Last up is financial data firm Moody's (MCO). As one of the "big three" ratings firms, Moody's controls around 40% of the market for debt ratings, a position that gives the firm ample cross selling opportunities among its user base. But this stock hasn't exactly been well liked over the last few years. Moody's deservedly got a lot of the blame for the financial crisis of 2008, as inflated credit ratings on mortgage-backed securities made investors believe that the bad debt they were buying was much safer than it was. And more recently, Warren Buffett's unceremonious selling of his stake in Moody's has spurred other investors to follow suit.
That's helped push MCO's short interest ratio up to 11.9.
At the end of the day, MCO is still one of the biggest games in town for debt ratings, and cheap credit costs have re-opened the debt issuance spigot worldwide. With interest rates expected to remain low for an extended period, that should remain the case for the foreseeable future.Credit ratings aren't the firm's only business. The firm also sells research and quantitative databases, products that (like ratings) are capital-light and produce impressive margins. The firm has been shoring up its balance sheet over the last few years, moving from a lot of leverage to a nearly debt-neutral position more recently. That extra wherewithal makes the risks of financial stress much less for the firm, and much more likely to see a short squeeze in the near term. To see this week's short squeezes in action, check out the of Large-Cap Short Squeezes portfolio on Stockpickr.
Twitter and become a fan on Facebook.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- 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 + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV