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Top Nasdaq Short-Squeeze Plays - 22609 views
The recent stock market volatility has created significant short-squeeze opportunities.
A short squeeze takes place when the short-sellers short-interest in a stock scramble to cover their bearish positions when that stock moves sharply upward; their buying ends up pushing shares even higher. Short positions of stocks are measured by the short-squeeze ratio, which represents the number of days it would take for the short-sellers to cover their positions based on the recent daily volume of the stock.
Stockpickr has come up with a list of the Top Nasdaq Short-Squeeze Plays for September.
One of the Nasdaq stocks with a high short ratio is Portfolio Recovery Associates (PRAA), a buyer of portfolios of defaulted consumer receivables, which has a ratio of 51.9. The company was just downgraded by Davenport from buy to neutral. The stock has a P/E of 16 and a PEG of 1.09.
Portfolio Recovery is owned by Second Curve Capital, an $800 million hedge fund, managed by Tom Brown, that specializes in financial services stocks. It has had a 20% annualized return after fees since inception. Other stocks that Second Curve likes include Capital One Financial (COF), with a 10.9 short ratio; RenaissanceRe Holdings (RNR), with a 2.5 ratio; and Montpelier RE Holdings (MRH), with a 22 ratio.
Another stock with a high short ratio is MWI Veterinary Supply (MWIV), a marketer of animal health products to veterinarians, which has a short ratio of 39.4. The company reported that third-quarter revenues were up 13% over the same quarter last year, and net income increased by 27%. The stock has a P/E of 27 and a PEG of 1.49.
MWI shows up in the Stockpickr portfolio called Idaho stocks, which lists the top stocks based in the state of Idaho. Other stocks on the list include Micron Technology (MU), with a 6.1 short ratio; IdaCorp (IDA), with a 13.6 short ratio; and American Ecology (ECOL), with a 6.5 ratio.
Middleby (MIDD), which makes and markets commercial foodservice and food processing equipment, has a short ratio of 36.7. The company announced last month that it is buying TurboChef, the high-speed oven maker, for $200 million in cash and stock. The stock has a P/E of 17 and a PEG of 0.75.
Middleby shows up in the portfolio of the Bjurman MicroCap Growth Fund, which has a Morningstar rating of three stars and is run by Thomas Barry. The fund has had an average annual return of 16.99% over the last five years. It also owns Dynamic Materials (BOOM), with a 10.6 short ratio; Diodes (DIOD), with a 17.1 ratio; and The Andersons (ANDE), with a ratio of 11.5.
For a list of all the Top Nasdaq Short-Squeeze Plays for September, check out the portfolio at Stockpickr.com.
Posted on Sept. 24, 2008