10 Stocks That Got Shredded By Short Sellers In 2012

bug shredded

Photo: http://www.youtube.com/watch?v=tPDLX0koXFs

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.

Automobiles & Components

Consumer Staples, Food & Tobacco

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.

Runners Up:
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.

Runners Up:
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

Runners Up:
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

Healthcare and Pharmaceuticals

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.

Runners Up:
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.

Runners Up:
VirnetX Holdings Corp. (VHC) -- 18 million shares borrowed, 32% annualized borrowing cost
Vringo Inc. (VRNG) - 14 million shares borrowed, 95% annualized borrowing cost

Media and Sports

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.

Runners Up:

Manchester United Plc. (MANU) - 24 million shares borrowed, 86% annualized borrowing cost
Virgin Media Inc. (VMED) - 49 million shares borrowed, 1% annualized borrowing cost

Metals and Mining

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.

Runners Up:
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).

Runners Up:
Sears Holdings Corp. (SHLD) - 14 million shares borrowed, 64% annualized borrowing cost
GameStop Corp. (GME) - 59 million shares borrowed, 7% annualized borrowing cost

Telecommunication and Hardware

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.

Runners Up:
Verizon Communications Inc. (VZ) - 50 million shares borrowed, 1% annualized borrowing cost
Frontier Communications Corp. (FTR) - 222 million shares borrowed, 48% annualized borrowing cost

This epic short didn't make this list, but it's worth reviewing...

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