Investors don’t have to disclose their short positions on stocks. So while a review of SEC filings can give you an idea of what investors like, it’s hard to tell what they hate.SunGard, one of the largest financial technology companies in the world has a product called Astec Analytics, which tracks securities lending data — a proxy for short selling.
They shared their data with us, breaking down the most shorted stocks of 2012 down sector by sector. The stocks are ranked by the total amount borrowing fees collected. SunGard then picked the most interesting stocks from the top end of the list of stocks shorted by volume.
There aren’t too many shockers in the top spots — Research In Motion and Facebook both get nods — but the runners up may catch you by surprise.
Some of them are extremely expensive to borrow (as you know short sellers borrow stocks, they don’t purchase them until the end of the trade) — SunGard included the cost to borrow these stocks over a year (“annualized borrowing cost”) to give you sense of how big a bet investors were willing to make on these companies.
Green Mountain Coffee Roasters Inc. (GMCR) - 42 million shares borrowed, 14% annualized borrowing cost
The expiry of the patents on its successful k-cup instant coffee pod in September have been keeping pressure on GMCR ever since, despite decent earnings results.
Star Scientific Inc. (STSI) - 33 million shares borrowed, 88% annualized borrowing cost
Supervalu Inc. (SVU) - 106 million shares borrowed, 77% annualized borrowing cost
Sandridge Energy (SD) - 78 million shares borrowed, 62% annualized borrowing cost
Lawsuits against members of the board, a lack of confidence and a number of analyst downgrades saw short interest rocket in the last months of 2012.
First Solar Inc. (FSLR) - 28 million shares borrowed, 21% annualized borrowing cost
Kinder Morgan Energy (KMP) - 4 million shares borrowed, 3% annualized borrowing cost
St. Joe Company (JOE) - 16 million shares borrowed, 22% annualized borrowing cost
Some poor earnings results at the start of the year and on-going concerns about the US economy and real estate market hit this publicly held company
American International Group (AIG) - 22 million shares borrowed, 1% annualized borrowing cost
Wells Fargo & Co. (WFC) - 48 million shares borrowed, 0.7% annualized borrowing cost
Arena Pharmaceuticals (ARNA) - 44 million shares borrowed, 48% annualized borrowing cost
Despite decent earnings numbers, uncertainty surrounding upcoming FDA approvals and a sharp rise in price in the first months of the year has many betting against Arena.
Spectrum Pharmaceuticals Inc. (HZNP) -- 23 million shares borrowed, 37% annualized borrowing cost
Osiris Therapeutics (OSIR) - 2 million shares borrowed, 76% annualized borrowing cost
Facebook (FB) - 96 million shares borrowed, and it costs 34% to borrow the stock over a year
After a severely disappointing IPO and questions of its ability to monetise its brand value, mixed signals after share lock-ups expired is making for an uncertain future.
VirnetX Holdings Corp. (VHC) -- 18 million shares borrowed, 32% annualized borrowing cost
Vringo Inc. (VRNG) - 14 million shares borrowed, 95% annualized borrowing cost
Netflix Inc. (NFLX) - 14 million shares borrowed, 5% annualized borrowing cost
With rival firms in the market concerns grow that Netflix would be outstripped, although talk of a takeover by Microsoft has been helping sentiment in recent months.
Manchester United Plc. (MANU) - 24 million shares borrowed, 86% annualized borrowing cost
Virgin Media Inc. (VMED) - 49 million shares borrowed, 1% annualized borrowing cost
Molycorp Inc. (MCP) - 27 million shares borrowed, 60% annualized borrowing cost
Concerns about demand for rare earth elements and the admittance that it is under investigation by the SEC for inaccuracies in its reporting, have been plaguing MCP.
Freeport McMoRan Copper & Gold (FCX) - 21 million shares borrowed, 2% annualized borrowing cost
Rare Element Resources Ltd. (REE) - 7 million shares borrowed, 41% annualized borrowing cost
Groupon (GRPN) - 53 million shares borrowed, 89% annualized borrowing cost
An easily copied idea and disappointing earnings results were exacerbated by rumours the board kicking out the CEO in November (although he has now managed to survive).
Sears Holdings Corp. (SHLD) - 14 million shares borrowed, 64% annualized borrowing cost
GameStop Corp. (GME) - 59 million shares borrowed, 7% annualized borrowing cost
Research in Motion Ltd. (RIMM) - 93 million shares borrowed, 2% annualized borrowing cost
Optimism surrounding the company's new range of Blackberry entering the market is being countered by ever increasing caution of RIM's future in the smartphone market.
Verizon Communications Inc. (VZ) - 50 million shares borrowed, 1% annualized borrowing cost
Frontier Communications Corp. (FTR) - 222 million shares borrowed, 48% annualized borrowing cost