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Suspicious Overearners

This screen finds companies that are potentially “overearning”.  We define this as companies with unusually high gross margins relative to their own history and an increase in their gross margins relative to the industry.  From that list, we show which companies have potentially suspicious rises in inventory, receivables or other current assets, which often indicates earnings manipulation.

See report here:  OE 20170627

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New shorts in Health Tech, Energy and Transports

The market value of short interest increased by 7.0% ($44.0) billion over the past 30 days. Net new active shorting increased by $8.5 bn. The strongest short activity was seen in Health Technology, Energy and Transportation. The  weakest short activity was seen in Consumer Services, Health Services and Consumer Durables (Chart 2). Consumer Durables, Non-Energy Minerals and Distribution Services have the highest short interest to shares outstanding (SISO, Chart 3)

Short interest spikes in Health Technology include Theravance Biopharma (TBPH), Allergan plc (AGN), Myriad Genetics (MYGN), . In Energy, spikes include Synergy Resources (SYRG) and Whiting Petroleum Corporation (WLL).

Stocks at risk of short squeeze include GATX Corp (GATX), Neustar Inc (NSR), Bofi Holding Inc (BOFI), Greenbrier Companies Inc (GBX), Big Lots Inc (BIG), Lindsay Corp (LNN), Lendingtree Inc (TREE) and Tailored Brands Inc (TLRD).

Click for the report.

Short covering in Tech, Tech Services & Consumer Services

Short investors continue to suffer. High SISO names are not only rising, but outperforming the broader market. This is the stuff of “risk-on” cycles in the market that often lead to strong returns for shorting subsequently.

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Click here for the Short Update, including charts on short interest by sector and stocks showing the largest spikes and drops in short interest. (Chart numbers below refer to charts in the report.)

The market value of short interest increased by 2.7% ($16.9) billion over the past 30 days. Net short covering totaled $9.6 bn. The strongest new short activity was seen in Producer Mfg, Communications and Utilities. The highest short covering activity was seen in Electronic Technology, Consumer Services and Technology Services (Chart 2). Consumer Durables, Minerals and Distribution Services have the highest short interest to shares outstanding (SISO, Chart 3)

Short interest spikes in Consumer Discretionary include Tempur Sealy (TPX), Fitbit (FIT) and Polaris (PII). In Health Tech, they included Exact Sciences (EXAS), bluebird bio (BLUE), Endologix (ELGX), Alder Bioph (ALDR) and ZELTIQ (ZLTQ). In Finance, NorthStar Realty (NRF), Digital Realty (DLR), Bank of the Ozarks (OZRK), Seritage (SRG) and LendingTree (TREE).

Stocks at risk of short squeeze include Insys Therapeutics Inc (INSY), Zeltiq Aesthetics Inc (ZLTQ), Ebix Inc (EBIX), Air Methods Corp (AIRM), Gamestop Corp (GME), Outerwall Inc (OUTR), Lannett Co Inc (LCI) and Adeptus Health Inc (ADPT).

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