J.C. Penney Company, Inc. (JCP), GameStop Corp. (GME): Billionaires Love These Heavily Shorted Stocks

SuperValu Inc. (NYSE:SVU) has the highest short interest of the five stocks with 41% of its outstanding shares shorted. The grocery stocks also has some of the highest interest from hedge funds with 23 notable investors and hedge funds owning the stock as of 3Q. Revenues are expected to be down 4% in FY2012, where SuperValu has been reducing prices and squeezing margins to boost volume, but it also plans on cutting $325 million in costs over the next two years. For the longer-term, we believe hedge funds are intrigued by the grocer’s strong regional market share position. Billionaires Jim Simons, Ken Griffin and Israel Englander all have SuperValu as part of their portfolio (check out Jim Simons’ top picks).

Barnes & Noble, Inc. (NYSE:BKS) has 38% of its outstanding shares shorted, but also saw a net increase of 4 filers and now has fifteen 13F filers owning the stock. Barnes is relatively flat over the past year, but expects sales to be up 2% in FY2013 after a 2% increase in 2012, with the sales expected to be up on increased digital content demand. Future earnings are expected to be much better in FY2013, with a net loss of $0.73 per share, after a loss of $1.41 in FY 2012. This loss is expected to further narrow in FY2014 to $0.34.

Additionally, investments from Microsoft and Liberty Media will help to further prop up the company and accelerate growth of its Nook product. Liberty Media’s $204 million cash infusion should boost its digital segment, and so should the $300 million investment made by Microsoft. Whitney Tilson of T2 Partners took a new position in the stock last quarter, (check out Whitney Tilson’s top picks).

To recap: these five stocks have a robust short interest, but are backed by major hedge funds. The overwhelming theme is that each operates in the retail sector. For more related coverage, continue reading here:

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