Market Sell-Off: Which Stocks are Short Sellers Betting Against the Most?

Michael Teague |

Vera BradleyFed Chairman Ben Bernanke’s announcement on Wednesday confirmed at least a month’s worth of speculation regarding the future of the central bank’s fiscal stimulus program. After the Chairman indicated that the Fed would likely begin tapering later in the year with the goal of concluding the third round of quantitative easing by mid-2014, stocks tanked over 1 percent across the board, with the sell-off showing no sign of letting up into Thursday as indices were down over two percent by the end of regular trading.

Though Bernanke and the FOMC both indicated that nothing about the Fed’s asset purchases would be changed in the immediate future, many investors have panicked, and some likely saw the announcement as a good opportunity to cash out on the impressive gains that equities have made in the first half of 2013.

Short selling is a trading method used by investors who are attempting to profit from the expectation or belief that a particular stock or security will drop in price. Short sellers do not own the stock they are trying to short, but essentially borrow it and sell it for its current price, and make a profit by buying the stock back after the price goes down. The practice carries a great deal of risk with it, of course, because if the stock goes up instead of down as expected, the short seller can lose a great deal of money very quickly.

One way of gauging how much a stock is being short-sold by investors is to look at the short interest percentage, calculated by dividing the number of shares being sold short by the total number of shares available. 

The following 7 stocks, all small and mid-cap, represent U.S. companies whose shares had the highest short interest percentages after two straight days of big losses for Wall Street, potentially indicating that investors believe that the shares are going to drop in price in the near future:

The WhiteWave Foods Company (WWAV) – The Bloomfield, Colorado-company owns well-known dairy and soy beverage product brands like Silk and Horizon Organic. The company’s market cap is $2.93 billion, with shares trading at $16.20, down 0.75 percent over the past week. WhiteWave’s short interest prior to Thursday’s close was a whopping 80.56 percent of available shares.

Amkor Technology Inc. (AMKR) – The Chandler, Arizona manufacturer of semi-conductors has a market cap of $655.37 million, with shares currently trading at $4.10, down 1.38 percent over the past week. Amkor’s short interest before Thursday’s close was 51.44 percent.

USANA Health Sciences Inc. (USNA) – The health and nutrition company has a market cap of $994.85 million, with shares trading at $69.88, up 5 percent over the last week. 50.71 percent of available shares were being sold short prior to Thursday’s close.

Vera Bradley Inc. (VRA) – The maker of handbags and accessory apparel has a market cap of $885.86 million, with shares currently trading at $21.90, up 4.7 percent over the past week. Just fewer than 45 percent of the company’s available shares were being sold short before Thursday’s close.

GT Advanced Technologies Inc. (GTAT) – The Nashua, New Hampshire based manufacturer of specialized semi-conductors for the LED and solar markets has a market cap of $476.2 million, with shares trading at $3.77, up 1.27 percent for the week. 41.44 percent of the company’s float was being shorted prior to Thursday’s close.

ITT Educational Services Inc. (ESI) – One of the U.S.’s most popular vocational training chains, ITT has a market cap of $579.08 million, with shares trading at $24.94, down 10.5 percent over the past week. Prior to Thursday’s close, the company’s short interest was 38.61 percent of its float.

Coinstar Inc. (CSTR) – The operator of Redbox DVD-rental kiosks and well as change-counting machines has a market cap of $1.6 billion, with shares currently trading at $57.42, up 1.48 percent for the week. Ahead of Thursday’s closing bell, 38.4 percent of the company’s shares were being sold short.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
VRA Vera Bradley Inc. 12.75 -1.92 -13.09 3,185,667
WWAV Whitewave Foods Company (The) 55.23 -0.17 -0.31 1,141,920
AMKR Amkor Technology Inc. 11.44 0.18 1.60 1,087,460
ESI ITT Educational Services Inc. n/a n/a n/a n/a
USNA USANA Health Sciences Inc. 59.45 -0.70 -1.16 138,131
MIND Mitcham Industries Inc. 3.73 0.04 1.08 25,443

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