By Fred Fuld
Updated at 3:35 p.m. EDT on July 6, 2009

Revenue and earnings surprises can cause stocks to make sharp moves upwards, which in turn can set off a short squeeze as short-sellers rush to cover their bearish positions.

For example, after Palm (PALM) announced better-than-expected sales and lower-than-expected losses on June 25, it rose more than 12% in after-hours trading, causing short-sellers to be squeezed.

A short squeeze occurs when short-sellers quickly buy in shares of a stock, driving the price of the stock 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.

With Palm's recent move in mind, Stockpickr has reviewed the heavily shorted tech stocks with market caps of more than $500 million and created a portfolio of the top financial short-squeeze plays.

One of the highest short interests in tech stocks is found in software provider Blackbaud (BLKB), whose products include The Raiser's Edge, used by nonprofit organizations. Its short ratio is 23.5, which means that it would take more than 23 days for shorts-sellers to cover their positions, based on the recent trading volume of the stock.

Blackbaud reported a revenue increase of 7.6% for the latest quarter, while its net income dropped by 42.2%. The stock pays a 2.5% yield, amounting to $17.5 million in total annual payouts, which is well-covered by the company's $58.36 million in operating cash flow. Its total debt level is $61.5 million, with $23 million in cash in the bank.

In Monday afternoon trading, Blackbaud was losing $1.94, or 12.1%, at $14.06. Earlier in the day, it was downgraded to to hold from buy by Jefferies.

Blackbaud is favored by former U.S. Vice President Al Gore through Generation Investment Management, the hedge fund he founded along with ex-Goldman Sachs (GS) executive David Blood. The fund currently has more than $1 billion under management. Blood and Gore also like Becton Dickinson (BDX), which has a 1.9 short ratio; Northern Trust (NTRS), with a 2.3 short ratio; and Johnson Controls (JCI), with a fairly high short ratio of 6.9.

Another heavily shorted tech stock is Advent Software (ADVS), a San Francisco-based provider of integrated software solutions for investment management companies, investment advisors, brokers, fund administrators, hedge funds and banks.

The company recently announced that it was named Best Technology Provider by HFMWeek and Global Securities Services Technology Vendor of the Year for the second consecutive year by ICFA magazine. Advent last reported a 136% increase in earnings on an 18.4% increase in revenues. The company generates $81.7 million in operating cash flow and has low debt of $15 million, with $36.3 million in cash.

Recently, Advent was down 42 cents, or 1.3%, at $31.62.

The mutual fund that owns the largest number of shares of Advent is the Legg Mason Partners Aggressive Growth Fund, which is currently rated two stars by Morningstar and is managed by Richard S. Freeman. The fund ranks in the top 35% of all large growth funds over the last six months. Other stocks it owns include Biogen Idec (BIIB), with a short ratio of 3.9; Genzyme (GENZ), with a 2.5 short ratio; and L 3 Communications (LLL), with a 1.9 short ratio.

For more ideas, check out the Top Tech Short-Squeeze Plays portfolio at Stockpickr.

At the time of publication, the author had no positions in stocks mentioned.