The market and the expert often have slight disagreements as to the strength of individual securities. It’s really up to every individual investor to choose who they want to believe – the pros or the wisdom of the crowd on the merits of a stock.
But with some plays, the experts and the investors don’t just have differing opinions on a play: they are diametrically opposed. This is perhaps best illustrated in stocks that have two key factors:
1) The stock carries a short float over 20 percent
If a stock is being shorted heavily, it means investors are betting the stock is going to fall in price. A float short over 20 percent is unusually high, and indicates vast swaths of traders are bearish on the stock.
2) The analyst consensus on the stock is at least “buy.”
This means that when all expert opinion on the stock is calculated, the majority of analysts either recommends or strongly recommends buying the stock – in spite of the float short.
When we applied these two pieces of criteria to the market, we found eight financial stocks that are currently being both shorted by a lot of investors yet still retain high marks from analysts:
AmTrust Financial Services (AFSI)
Market Cap: $2.05 billion
Price: $34.69
P/E Ratio: 9.52
Float Short: 30.56 percent
Encore Capital Group (ECPG)
Market Cap: $1.26 billion
Price: $49.22
P/E Ratio: 17.36
Float Short: 22.49 percent
National Bank Holding Corp. (NBHC)
Market Cap: $1.08 billion
Price: $21.18
P/E Ratio: 123.94
Float Short: 26.69
PacWest Bancorp (PACW)
Market Cap: $1.83 billion
Price: $41.35
P/E Ratio: 26.87
Float Short: 29.57 percent
PHH Corporation (PHH)
Market Cap: $1.40 billion
Price: $24.70
P/E Ratio: 11.29
Float Short: 30.66 percent
Radian Group Inc. (RDN)
Market Cap: $2.42 billion
Price: $13.95
P/E Ratio: N/A
Float Short: 28.95 percent
Umpqua Holdings Corporation (UMPQ)
Market Cap: $2.09 billion
Price: $18.86
P/E Ratio: 21.03
Float Short: 21.06 percent
World Acceptance Corp. (WRLD)
Market Cap: $1.02 billion
Price: $86.43
P/E Ratio: 9.64
Float Short: 34.40 percent
