Global stocks with short interest at an annual high
Today we let the data do the talking rather than trying to be topical by screening securities lending activity to see which companies have short selling at new annual highs. There is a slight bias towards Software and Services and Financial stocks. We look at investor sentiment in J2 Global Communications (NASDAQ:JCOM), CACI International Inc (NYSE:CACI), Digital River Inc (NASDAQ:DRIV), Autonomy Corp (LON:AU), Sohu.com Inc (NASDAQ:SOHU), Bankinter SA (MCE:BKT), Banco de Valencia (MCE:BVA), Hancock Holding (NASDAQ:HBHC) and First Niagara Financial Group (NASDAQ:FNFG).
US listed J2 Global Communications provides outsourced communication business solutions worldwide. It’s most popular product, eFax, is said to be used by 50% of Fortune 500 companies (one wonders how frequently!). Due to report fourth-quarter earnings on 15th February, short interest in the stock has increased from 11% to an annual high of 14.5% of total shares outstanding on loan since late November, when the share price reached an annual high of 30 USD. The high level of short interest, coupled with a decrease in institutional ownership, means that sentiment is uniformly negative for J2.
Digital River and CACI International Software and Services companies have also seen short interest reach new annual highs of 14.8% and 13.6% shares outstanding on loan respectively. However, both these stocks have several convertible bonds in issue and therefore short interest may be clouded by convertible arbitrage.
The FTSE 100 company, Autonomy Corp, has recently been a regular feature appearing in the Data Explorers screen for stocks with short interest reaching a new 52-week high. Shares of the software leader are trading near thresholds last observed in August after reporting strong earnings last month. However, short interest has been consistently rising since late November increasing from 4% to 9.4% of total shares outstanding following a year of flat lining short interest at 4%. Interestingly, lendable quantity, which can also be used as a proxy for institutional ownership, also reached an annual high of 72.6 million shares in late January. Could this contrasting investor sentiment be due the delay of Autonomy’s acquisition of an unidentified company?
Chinese internet and computer services company, Sohu.com Inc which is listed on the NASDAQ, recently reported strong fourth-quarter earnings. A surge in share price, over the month of January, has led to this reaching a new all time high beating levels reached in 2008. It would not then be surprising that investors believe that the stock is due a price correction which has led to short interest increasing from less than 1% to an annual high of 6% of total shares outstanding since November.
Several global banking stocks also feature on the screen. In Europe, IBEX listed mid-size banks Bankinter SA and Banco de Valencia, both continue to see rising short interest despite a sharp rebound in share price in January. Short interest has increased over the past six months from 4% in both banks to 12% in Bankinter and 5% in Banco de Valencia. Although short interest is less changed and lower in the latter, both banks are highly saturated in that 90% of the lendable supply of both banks is currently out on loan.
In North America, Hancock Holding has seen a rally in its share price since September and has recently announced a merger deal with Whitney Holding Corp. Short interest has reached an annual high of 13.8% of total shares outstanding on loan, although it must be noted that the recent dividend could be inflating this figure slightly. Short interest in First Niagara Financial Group has also reached an annual high of 11.7% of total shares outstanding on loan. The bank reported strong earnings last month.
