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Tuesday
Apr172012

S&P 1500 Most Heavily Shorted Stocks

Short interest figures for the month of March were released last week, and in the table below we highlight the 31 stocks in the index that have 25% or more of their freely floated shares sold short.  As shown, Diamond Foods (DMND) and KB Home (KBH) both have more than 50% of their float sold short.  Needless to say, when short interest is this high, the negative case is pretty well known.  That's not to say the stocks cannot still go down, but if you are short the names, you have a lot of company.  Breaking out the list by market cap shows that thirteen of the names on the list are small caps, twelve are mid caps, and six are large caps (FSLR, GME, RRD, SHLD, SVU, and X).

A case in point regarding stocks with high short interest being crowded trades is First Solar (FSLR).  While short-sellers have been coining money on the stock for months now, today the stock came out with what would often times be considered negative news when the company announced that it would close plants due to weaker demand and cut 30% of its workforce.  On the news, however, the stock rallied more than 10%, as traders who were short the stock were forced to cover their shorts when the stock didn't go down. 

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