By Stockpickr Staff
Posted on May 15, 2009


According to Jim Cramer, short-sellers of banks and oils are being destroyed due to the stocks' strong moves to the upside. But financial and petroleum companies aren't the only ones rising. The tech stocks have also done extremely well, also in part because of short squeezes.

A short squeeze occurs when short-sellers quickly buy in shares of the stock in order to cover their bearish positions, driving the price of stocks up sharply. The ratio for measuring short-squeeze opportunities is the short ratio, which is the number of days it would take the short sellers to cover their position based on recent average daily volume.

Stockpickr has reviewed the technology stocks with high short interest and market caps of more than $500 and compiled a portfolio of the Technology Short-Squeeze Plays for May.

Blackboard (BBBB) is a tech stock with a high short ratio of 15.2, meaning that it would take more than 15 days for the short-sellers to cover their positions based on current volume. Blackboard provides online teaching software applications to colleges and universities across the U.S. The company just concluded its acquisition of Angel Learning, a developer of e-learning software, for approximately $95 million.

Last week, Blackboard announced that its first-quarter sales rose 26 %, but it generated a slight loss and lowered guidance. The company has total debt of $151 million, with almost as much cash, amounting to $142 million. Operating cash flow is $90 million.

Blackboard is owned by the Morgan Stanley Institutional Small Company Fund, which received three stars from Morningstar and is managed by David Cohen. It ranks in the top 20% of all small-growth funds for the last five years. Morgan Stanley also owns Blue Nile (NILE), with a short ratio of 13.7; Morningstar (MORN), with a 7.9 short ratio; and Vail Resorts (MTN), with a 6.1 ratio.

Bankrate (RATE), an Internet-based financial information company, is another heavily shorted technology stock, with a 14.7 short ratio. The company reported lower profits last year, announcing earnings of 25 cents a share for the latest quarter, vs. 35 cents for the same quarter last year. This is blow to analysts' expectations of 33 cents. In addition, Bankrate's revenue dropped by 10%. This debt-free company has $47 million in cash and an operating income of $46 million.

Bankrate is owned by Winslow Green Growth Fund, which has an objective of capital appreciation through environmentally responsible investing. The fund was up in five out of the last six calendar years. Winslow also own First Solar (FSLR), with a short ratio of 2; American Superconductor (AMSC), with an 8.1 short ratio; and Energy Conversion Devices (ENER), with a 5.5 short ratio.

For more ideas, check out the Technology Short-Squeeze Plays portfolio.