Top Financial Short-Squeeze Plays
With the financial sector dominating the business news headlines, and financial stocks such as Goldman Sachs (GS) - Get Goldman Sachs Group Inc. (The) Report and JPMorgan (JPM) - Get JP Morgan Chase & Co. Report helping to lead some moves higher, now may be the time to look at heavily shorted names in the sector in anticipation of a snapback, when short-sellers scramble to cover their positions.
This is especially true with companies such as
Lehman Brothers
( LEH) and
UBS
(UBS) - Get UBS Group AG Registered Report
, who are fighting the short-sellers by issuing stock to increase their liquidity. The key ratio for analyzing short-squeezes is the short ratio, which represents the number of days it would take for those shorting a stock to cover their bearish positions should the stock start moving higher, based on the stock's recent average daily trading volume.
With this in mind, Stockpickr has compiled a list of the
Top Financial Short-Squeeze Plays
.
One of the stocks with a high short ratio is
Woori Finance Holdings
(WF) - Get Woori Financial Group Inc. American Depositary Shares (each representing three (3) shares of) Report
, a South Korean-based financial services and banking company with a short ratio of 45.5. The stock rose 9% April 1, following Lehman Brothers'
liquidity news
. Woori has a forward price-to-earnings ratio of 6.6 and a P/E-to-growth ratio of 0.6.
TheStreet Recommends
Woori appears in a Stockpickr portfolio called
South Korean Stocks You Can Invest In From US
. Other stocks in the portfolio include
Kookmin Bank
(KB) - Get KB Financial Group Inc Report
, which has a 1.4 short ratio,
Shinhan Financial Group
(SHG) - Get Shinhan Financial Group Co Ltd American Depositary Shares Report
, with a 0.9 short ratio, and
SK Telecom
(SKM) - Get SK Telecom Co. Ltd. Report
, with a short ratio of 2.
Another stock with a high short ratio is
Greenhill & Co
(GHL) - Get Greenhill & Co. Inc. Report
, a New York investment banking firm with a short ratio of 34.2. The company recently appointed its managing director Richard Lieb to the chief financial officer position. The stock has a forward P/E ratio of 14.6, a PEG of 1 and a yield of 2.5%.
Greenhill is a stock owned by Al Gore's investment vehicle,
Generation Investment Management
. Gore also owns shares of
Johnson Controls
(JCI) - Get Johnson Controls International plc Report
, with a short ratio of 4,
Aflac
(AFL) - Get AFLAC Incorporated Report
, with a 2.1 short ratio, and
Becton, Dickinson
(BDX) - Get Becton Dickinson and Company Report
, which has a short ratio of 0.9.
Enstar Group
(ESGR) - Get Enstar Group Limited Report
is another financial stock with a high short ratio; the manager of insurance companies has a short ratio of 24.1. The company recently closed its acquisition of AMP Limited's Australian-based reinsurance and insurance operations. The stock has a trailing P/E ratio of 22.
Enstar is a favorite of top stock value investor and hedge fund manager Michael Price. He also holds
Tyco Electronics
(TEL) - Get TE Connectivity Ltd. Report
, which has a 1.9 short ratio,
CBS
(CBS) - Get CBS Corporation Class B Report
, with a 5.5 short ratio, and
Northwestern
( NWEC), with an 11.6 short ratio.
For for other heavily shorted stocks in the sector, check out the
Top Financial Short-Squeeze Plays
at Stockpickr.com.
At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.
James Altucher is president of
LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for the
Financial Times
and the author of
Trade Like a Hedge Fund
,
Trade Like Warren Buffett
and
SuperCa$h
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
to send him an email.
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