Six Financial Plays Investors are Betting Against

Jacob Harper |

There are a wide array of investment strategies that don't get the attention from retail investors of tried-and-true value investing. One in particular that is popular with sophisticated market players that doesn't get quite the press of value investing is shorting, or betting that a particular equity will fall in price. While less well known, it can be quite lucrative indeed.

Noted "shorter" Jim Chanos has argued that shorting is an essential part of keeping the market, as short sellers are "real-time financial detetctives" who zero in on companies with improper valuations. But shorting isn't just altruistic; if correct shorting stocks can net stock players a fortune, as Chanos did when he bet against Enron.

Keeping in mind that shorting is a "real-time" detetctive endeavour, we decided to look at the young 2014 market and see what stocks investors are shorting heavily right now. To narrow the scope a bit more, we decided to focus on the otherwise bullish Financial sector, and limit our scope to companies worth between $200 million and $3 billion, commonly known as "small-caps."

A "float short" or over 20 percent (where 20 percent of shares are being shorted) is considered unusually high, and indicate a stock investors are currently wary of. All six of these stocks are currently carry a short float of at least 20 percent:



Encore Capital Group (ECPG)

Market Cap: $1.24 billion

Price: $48.51

P/E:17.08

Float Short: 22.71 percent

 

HCI Group, Inc. (HCI)

Market Cap: $544.06 million

Price: $50.79

P/E:9.23

Float Short: 23.39 percent

 

PacWest Bancorp (PACW)

Market Cap: $1.89 billion

Price: $42.64

P/E: 27.69

Float Short: 30.64 percent

 

PHH Corporation (PHH)

Market Cap: $1.35 billion

Price: $23.48

P/E: 10.87

Float Short: 29.92 percent

 

Western Asset Mortgage Capital (WMC)

Market Cap: $355.76 million

Price: $14.76

P/E: N/A

Float Short: 21.57 percent

 

World Acceptance Corp. (WRLD)

Market Cap: $992.54 million

Price: $85.35

P/E: 10.32

Float Short: 36.82 percent

 

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
WMC Western Asset Mortgage Capital Corporation 10.00 0.00 0.00 176,262
HCI HCI Group Inc. 40.30 0.22 0.55 93,316
ECPG Encore Capital Group Inc 30.85 0.40 1.31 308,639
WRLD World Acceptance Corporation 59.17 0.68 1.16 88,637
PACW PacWest Bancorp 53.47 0.43 0.81 473,718
PHH PHH Corp 14.11 -0.05 -0.35 370,900
JDSHF Jardine Strategic Holdings Ltd (Bermuda) 36.28 0.00 0.00 30

Comments

Emerging Growth

Taranis Resources Inc.

Taranis Resources Inc is an exploration stage company. The Company along with its subsidiaries is engaged in the acquisition and exploration of mineral properties. Its projects include Thor Property in…

Private Markets

Cross Campus

With over 500 members and operating 80,000 square feet by summer 2016, Cross Campus is one of the country’s top ten shared, collaborative office or "coworking" operators in the US.…

Ozobot by Evollve Inc

Ozobot is a world leader in compact super intelligent robots that entertain and educate through fun interactive gaming.