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TheStreet Open House

Short Sellers Are More Bullish About These Hedge Fund Favorites

Looking for stocks with bullish sentiment from both short sellers and hedge funds? If so, you will likely find this list very interesting.

To put it simply, we created a list of stocks on the US exchanges experiencing significant levels of short covering over the month and net positive investments from institutions over the current quarter. Using these criteria, we were left with 12 names, all listed below in detail.

Not sure what any of these terms mean? Don’t worry, we all start at the beginning. Here’s a recap of what it means and why we bothered screening with this data:

Institutional investors are also known as “big money” investors or managers. They represent big pools of money such as investment banks, pension funds, mutual funds, hedge funds, endowment funds, etc. When they invest in stocks, they can invest hundreds of thousands of dollars or more at one time. These transactions, called “block trades,” can have a significant effect on share prices.

Because institutional investors handle such large amounts of money, it is easy enough to assume that the big money managers know what they are doing — or at the very least know more than the average investor. This is why these investors are also sometimes referred to as “smart money.”

If institutional investors start investing in a company, regular investors can assume that some of the most talented analysts and money managers expect the company’s share prices to increase over time. The actions of these investors are useful in identifying companies for further analysis.

The stocks on our list are experiencing significant investment from big money.

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Short Covering: Short sellers make money when share price drops. To do this they borrow stock, sell the stock in the market, and then buy the shares back at a later date, and return it to the lender. If price goes down between selling the stocks and buying it back, short sellers keep the difference.

Analysts track how many shares are being “shorted” in the market, and use that data to gauge sentiment.

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