We are introducing our improved short squeeze screen. The idea behind it is simple:
* Heavily shorted stocks,
* where short exposure has increased meaningfully very recently and
* where the stock price is rising fast,
create the perfect conditions for squeezes. Weak short hands could be forced out on market-moving news.
The screen highlights those companies that are reporting earnings in the next 14 days, providing a potential catalyst for a squeeze. (See the columns in red on the right hand side.)
Our Short Update report, which contains this model, details on where short investors are increasing exposure and charts of stocks with spikes and drops in short interest, can be found here: SU 20171018
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
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.
Students of stock market history will want to keep a copy of this report on hand. Might serve as a warning of what happens during stock market bubbles….
This is a Buy recommendation on Enron published by Bear Stearns in 2001: Enjoy. ENE_BearStearns_20010126