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.

EXCLUSIVE OFFER: Jim Cramer’s Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he’s trading today with a 14-day FREE pass.

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.

If they think shares will fall they are “short selling” if they think it will rise they are “short covering” – that is to say they are pulling back on their original trades. Therefore, short covering implies short sellers are becoming less pessimistic, and they believe the stocks may have more upside than downside to price in over the next few days and weeks.

We looks at short seller activity month over month, and took only the names with significant short decreases (short covering) (a bullish sentiment).

Investing Ideas: The List

Do you think short sellers are correct that these hedge fund favorites have more upside to price in? Use this list as a starting point for your own analysis.

Interactive Charts: Compare 1-year return for the first 9 stocks listed below

1. American Eagle Outfitters, Inc. ( AEO): Operates as an apparel and accessories retailer in the United States and Canada. Market cap at $4.17B.  Net institutional purchases in the current quarter at 16.0M shares, which represents about 9.31% of the company’s float of 171.79M shares. Shares shorted have decreased from 12.10M to 10.21M over the last month, a decrease which represents about 1.1% of the company’s float of 171.79M shares. Days to cover ratio at 2.48 days.

 

2. Abercrombie & Fitch Co. ( ANF): Operates as a specialty retailer of casual apparel for men, women, and kids. Market cap at $3.9B.  Net institutional purchases in the current quarter at 4.5M shares, which represents about 6.15% of the company’s float of 73.19M shares. Shares shorted have decreased from 11.45M to 10.64M over the last month, a decrease which represents about 1.11% of the company’s float of 73.19M shares. Days to cover ratio at 3.3 days.

 

3. Arena Pharmaceuticals, Inc. ( ARNA): Focuses on discovering, developing, and commercializing oral drugs in the therapeutic areas of cardiovascular, central nervous system, inflammatory, and metabolic diseases. Market cap at $2.06B.  Net institutional purchases in the current quarter at 29.4M shares, which represents about 13.6% of the company’s float of 216.13M shares. Shares shorted have decreased from 61.75M to 56.26M over the last month, a decrease which represents about 2.54% of the company’s float of 216.13M shares. Days to cover ratio at 6.75 days.

 

4. Blyth, Inc. ( BTH): Operates as a multi-channel company in the home fragrance and decorative accessories industry. Market cap at $316.12M.  Net institutional purchases in the current quarter at 2.9M shares, which represents about 30.72% of the company’s float of 9.44M shares. Shares shorted have decreased from 4.66M to 4.46M over the last month, a decrease which represents about 2.12% of the company’s float of 9.44M shares. Days to cover ratio at 7.3 days.

 

5. Peabody Energy Corp. ( BTU): Engages in the exploration, mining, and production of coal. Market cap at $7.35B.  Net institutional purchases in the current quarter at 23.2M shares, which represents about 8.68% of the company’s float of 267.26M shares. Shares shorted have decreased from 19.76M to 15.87M over the last month, a decrease which represents about 1.46% of the company’s float of 267.26M shares. Days to cover ratio at 1.89 days.

 

6. Beazer Homes USA Inc. ( BZH): Designs, builds, and sells single-family and multi-family homes in the United States. Market cap at $406.89M.  Net institutional purchases in the current quarter at 9.7M shares, which represents about 43.17% of the company’s float of 22.47M shares. Shares shorted have decreased from 7.60M to 7.35M over the last month, a decrease which represents about 1.11% of the company’s float of 22.47M shares. Days to cover ratio at 4.39 days.

 

7. CBOE Holdings, Inc. ( CBOE): Intends to operate as the holding company for Chicago Board Options Exchange (CBOE), which operates as an organized marketplace for the trade of standardized, listed options on equity securities. Market cap at $2.63B.  Net institutional purchases in the current quarter at 4.4M shares, which represents about 5.12% of the company’s float of 85.97M shares. Shares shorted have decreased from 3.43M to 2.52M over the last month, a decrease which represents about 1.06% of the company’s float of 85.97M shares. Days to cover ratio at 5.8 days.

 

8. Conns Inc. ( CONN): Operates as a specialty retailer of home appliances, consumer electronics, home office equipment, lawn and garden products, mattresses, and furniture in the United States. Market cap at $1.04B.  Net institutional purchases in the current quarter at 3.0M shares, which represents about 17.05% of the company’s float of 17.60M shares. Shares shorted have decreased from 5.90M to 5.66M over the last month, a decrease which represents about 1.36% of the company’s float of 17.60M shares. Days to cover ratio at 16.97 days.

 

9. Corcept Therapeutics Incorporated ( CORT): Engages in the discovery and development of drugs for the treatment of severe metabolic and psychiatric disorders. Market cap at $155.7M.  Net institutional purchases in the current quarter at 10.1M shares, which represents about 15.73% of the company’s float of 64.22M shares. Shares shorted have decreased from 4.22M to 3.48M over the last month, a decrease which represents about 1.15% of the company’s float of 64.22M shares. Days to cover ratio at 7.94 days.

 

10. Genomic Health Inc. ( GHDX):  Focuses on the development and global commercialization of genomic-based clinical laboratory services that analyze the underlying biology of cancer allowing physicians and patients to make individualized treatment decisions. Market cap at $854.85M.  Net institutional purchases in the current quarter at 1.5M shares, which represents about 9.09% of the company’s float of 16.51M shares. Shares shorted have decreased from 2.00M to 1.78M over the last month, a decrease which represents about 1.33% of the company’s float of 16.51M shares. Days to cover ratio at 7.35 days.

 

11. KBW Inc. ( KBW): Operates as an investment bank specializing in the financial services industry in the United States and Europe. Market cap at $527.05M.  Net institutional purchases in the current quarter at 1.9M shares, which represents about 6.61% of the company’s float of 28.74M shares. Shares shorted have decreased from 2.68M to 1.93M over the last month, a decrease which represents about 2.61% of the company’s float of 28.74M shares. Days to cover ratio at 2.92 days.

 

12. Leap Wireless International Inc. ( LEAP): Provides digital wireless services under the ‘Cricket’ brand name in the United States. Market cap at $525.56M.  Net institutional purchases in the current quarter at 3.7M shares, which represents about 8.79% of the company’s float of 42.11M shares. Shares shorted have decreased from 23.65M to 22.92M over the last month, a decrease which represents about 1.73% of the company’s float of 42.11M shares. Days to cover ratio at 8.67 days.


Written by Rebecca Lipman. Short data sourced from Yahoo! Finance, institutional data sourced from Fidelity, all other data sourced from Finviz.

 

Analyze These Ideas: Getting Started

Did you find this list useful as a starting point for your analysis? Do you have a list requests? Leave your comments below and we’ll do our best to deliver.

null

More from Stocks

Dow Edges Up, Stocks Narrowly Mixed in Final Hour

Dow Edges Up, Stocks Narrowly Mixed in Final Hour

Buy Activision Stock After Record-Setting 'Call of Duty' Opening?

Buy Activision Stock After Record-Setting 'Call of Duty' Opening?

Amazon Is Among 10 Big Stocks Set to Change Direction

Amazon Is Among 10 Big Stocks Set to Change Direction

It's Hard to Trust the Action in the Stock Market Right Now

It's Hard to Trust the Action in the Stock Market Right Now

Canopy Growth CEO: This Is What Legalization of Cannabis Looks Like in Canada

Canopy Growth CEO: This Is What Legalization of Cannabis Looks Like in Canada