When Being ‘Short’ Backfires! – Navistar International Corp (NAV), Pandora Media Inc (P), Apple Inc. (AAPL)

Page 1 of 2

It Doesn’t Take Much to Reverse a Long-Term Shorted Stock

Up until last week, Navistar International Corp (NYSE:NAV) traded with a one-year loss of 42%. This is a stock that had seen an incredible downtrend since January 2011, and therefore had created a significant amount of short interest. Because after all, shorts want to invest in a stock that trades lower — that’s how they make money.

Last week, after announcing earnings, the stock saw gains of more than 40%. The company’s earnings were not that good; it beat on the bottom line but missed on the top line. However, the neat thing about high short interest — in this case 35.30% of its float — is that it doesn’t take a lot to create large upside. In this case it was the announcement of a new CEO. While I don’t believe in the long-term upside of this stock, investors must acknowledge that with it being so oversold that additional gains are possible.

Navistar International Corp (NYSE:NAV)When Shorts Cover it Often Creates a Multi-Day Rally

Another company that saw a similar reaction was Pandora Media Inc (NYSE:P). The company announced earnings after the market closed on Thursday and then popped 17.56%. Unlike Navistar International Corp (NYSE:NAV), Pandora’s earnings beat on both the top and bottom line, as the company saw strong performance in mobile.

As a result, these results forced shorts to cover, and there were a lot of them, almost 30% of the stock’s float. As you can see with Navistar International Corp (NYSE:NAV), when shorts cover it can sometimes create a multi-day rally. Therefore, watch Pandora Media Inc (NYSE:P) this week, and don’t be surprised if it continues to trade higher.

A Look at Why Some Investors Prefer Short

Two weeks ago, another stock with large short interest — 30%% of its float — saw a massive pop after earnings and has continued to trade higher. This stock is Universal Display Corporation (NASDAQ:PANL). This is a stock where the short interest makes sense, and should give retail investors an idea of what shorts might seek in a good short candidate. The stock trades at 18.13 times sales and is a maker of technologies that are used in various smartphones. And with the decline of Apple Inc. (NASDAQ:AAPL), it has also seen a decline, until it announced earnings on Feb. 28. Personally, I wouldn’t touch the stock with its valuation so high, therefore despite gains, don’t expect shorts to leave anytime soon.

Finally, one of the more controversial stocks of the last four months has also created a very large short interest. UniPixel Inc (NASDAQ:UNXL) was a small $70 million company back in December, but is now valued at over $260 million. This large run-up has followed the company’s announced of a “multi-million dollar” deal with an unnamed PC vendor.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!