This page has been archived and commenting is disabled.

These Are The Most Hated Stocks (Summer 2014 Edition)

Tyler Durden's picture




 

In the fall of 2012, realizing very well and reporting accordingly that nothing is fixed in the fourth year of the centrally-planned New Normal, that the economy is as bad as ever and by implication that the Fed would soon unleash another round of QE to "boost the contracting economy" (as it did when it revealed QE3 which it would not have done had the economy been improving as so many "experts" lied, and still lie), we made a simple proposition: in a New Normal world in which the Fed is the Chief Risk Officer of the "market", and in which nothing is ever allowed to go down, the best "alpha-generating" strategy is to go against the grain of those whose job is to hedge against possible downturns, and being long the most hated, a/k/a most shorted courtesy of hedge fund groputhink, companies.

Following up on the initial report last September, we found that the "most shorted stocks" had soared relative to the S&P 500, and while an outright basket long consisting of the most-shorted names would have outperformed the market massively, even a pair trade in which one was long the most shorted names and short the S&P 500 would have outperformed 99% of all hedge funds.

Fast forward to today when absolutely nothing has changed since 2012, and while the Fed may be tapering (if only for a little big longer before it is forced to untaper), the BOJ was added to the easing fray and the ECB itself is about to confirm that the European economy has re-entered a triple dip recession. Remember: central banks do not get involved with unconventional policy if everything is fine and the economy is recovering.

To be sure, the recent hiccup in the high beta "story" names means that the record outperformance of the most shorted names over the S&P was impacted in recent months...

... however, since the fundamental (or quite the opposite) monetary picture remains the same (and any market crash will be greeted with another monster money printing fest by the Fed) there is no reason to assume that the most idiotic, and thus profitable (yes, bizarro world and so on) "alpha" strategy of the past 5 years will stop working any time soon.

Anyway, below, for the third year running, we present the 50 most shorted (and most convex) Russell 2000 names, which are sufficiently small and illiquid, that even the tiniest rumor or upgrade by a contrarian research shop is able to send into a short covering frenzy. They are sorted by short interest as a % of the float in declining order, which means that the absolutely most hated stocks are at the top.

It goes without saying that in a normal economy, without crony capitalist (bordering on fascism) central planning, without socialist interventions to keep the most insolvent afloat, and without another credit and equity bubble allowing these cash burners to boost their capital at any given moment on covenant-lite terms, they would all be bankrupt years ago.

As it stands right now, they are some the best performing stocks around.

Thanks uncle Ben and aunt Janet.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 05/23/2014 - 15:26 | 4789516 Aknownymouse
Aknownymouse's picture

I am taking orders for S&P 2K hats. You only have 5 days before hats become old news.

Fri, 05/23/2014 - 15:48 | 4789571 power steering
power steering's picture

That Goodrich pete short is working out well. They are absoluteling KILLING it!

Fri, 05/23/2014 - 16:24 | 4789680 aVileRat
aVileRat's picture

Remember that debt article ?

Be careful around GDP, RICE & KWK. Many have died on the Tuscaloosa marine shale, and there are much better ways to play this play (if you know WTF it is) or if you are a reaching for yield retail.

Also, EBITDAX is a joke as CAPEX is impossible to "smooth" to quarters in the same way Non-GAPP in Tech is a joke. Sceen on DACF if you are a fundamentalist. But whatever, yield sells; who's buying.

Funny that SWHC is on the list. Anyone (and Tyler knows) a simple background check and margin model can figure that one out. Must be all those "ethical" investor groups.

 

Fri, 05/23/2014 - 17:01 | 4789769 samex157
samex157's picture

Got to love ANV on the list. Even though company had a lot of good news last two Q, it hoovers at all time lows. There is so much positive about it, and short interest the largest in mining sector. 

It will get squeezed in coming weeks. New partner coming on board. Check it out. 

Fri, 05/23/2014 - 22:07 | 4790388 UrbanMiner
UrbanMiner's picture

When gold moves in any meaningful way ANV will explode, in a run from $1350 to $1600 - $1700 gold and this stock is a 400% return in a matter of months, probably 1000% return over a couple years if the gold bull resumes. Enough cash on hand to survive for quite a while, a big debt load but manageable, and huge reserves. Likely a takeover target. I always watch this stock like a hawk as a massive leverage to the gold price. I fell asleep for awhile on my stops and lost some money on this guy, now out, but I'm waiting in the bushes, when this things turns (when gold turns) I'm all in, when it does move, and the squeeze starts this thing will give people whiplash it will move so fast.

Fri, 05/23/2014 - 16:20 | 4789667 Cpl Hicks
Cpl Hicks's picture

Best to go long on asshats.

They will be the new fashion statement rolled out by Barry and Michelle for the summer BBQ rib-eatin' season..

Fri, 05/23/2014 - 15:30 | 4789524 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

Tyler, shouldn't the most shorted index of stocks from the Russell 2000 be (previously was) compared to the Russell 2000 Index?

Fri, 05/23/2014 - 15:33 | 4789532 negative rates
negative rates's picture

That depends, is there an 8 ball involved? If not then prolly not.

Fri, 05/23/2014 - 15:31 | 4789526 Carpenter1
Carpenter1's picture

Easy to understand how our ancestors decided to grab a pitchfork and make "social change," probably still puts fear into "leaders."
That would be why they spout on about how civilized and progressive we are now, or more correctly, how they want us to stand outside gates with signs, hoping that will make a difference.

I would say our ancestors had it figured out.

Fri, 05/23/2014 - 15:32 | 4789528 Uber Vandal
Uber Vandal's picture

Smith & Wesson Holding Corp (SWHC)? I would have thought their business would be booming, or something to that effect.

Fri, 05/23/2014 - 15:39 | 4789546 NoDebt
NoDebt's picture

Business if fine.  It's the Constitutional Amendment supporting it that's taking incoming fire.

Fri, 05/23/2014 - 15:47 | 4789569 cossack55
cossack55's picture

Operation Choke Point

Fri, 05/23/2014 - 15:33 | 4789534 Amish Hacker
Amish Hacker's picture

It's almost as if the markets are broken.

Fri, 05/23/2014 - 15:34 | 4789536 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

you don't say?

Fri, 05/23/2014 - 15:35 | 4789537 intric8
intric8's picture

Fuckin racket i tell you

Fri, 05/23/2014 - 15:37 | 4789542 eclectic syncretist
eclectic syncretist's picture

It is almost time to short these stocks.  perhaps only another week or so.

Fri, 05/23/2014 - 15:47 | 4789566 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

keep telling yourself that. Or save some time and just throw a wad of cash out of your car window. 

Fri, 05/23/2014 - 15:41 | 4789548 TheRideNeverEnds
TheRideNeverEnds's picture

A new paradigm has been achieved, a permanent high plateau reached, in this new normal all news is either good news or great news, the market does one thing and that's go up.  everyone that is long is a genius, just buy everything and you too can be a winner.  Stocks, bonds, notes, oil, gas, it doesnt matter; buy it all then buy some more and have a fucking party. 

 

VIX confirms, risk is over, a thing of the past.

 

Thank you FED; fuck the free market, central planning never fails. 

 

Fri, 05/23/2014 - 15:53 | 4789586 TheRideNeverEnds
TheRideNeverEnds's picture

PS: 1900 Bitchez! 

Fri, 05/23/2014 - 15:58 | 4789601 Bear
Bear's picture

Try 1899.25 on ES

Fri, 05/23/2014 - 15:54 | 4789589 Bear
Bear's picture

"central planning never fails" .... until it fails

Fri, 05/23/2014 - 22:28 | 4790434 UrbanMiner
UrbanMiner's picture

The market is the only thing they can actually support centrally, without it America is dead in the water. 20,000 - 22,000 dow, Nasdaq to the 6000, not because I want it, I'm neutral, but the writing is on the wall. The question to me is, when will they let the gold bugs get in on the action, inflation is running at least 5% maybe even 7%, yet gold is rangebound. We'll know inflation is really starting to get hot when gold moves. When this thing does blows off, and it will, it will be the mother of all blow offs, no one will want to touch the market for another 10 years afterwards.

Fri, 05/23/2014 - 15:43 | 4789556 Bear
Bear's picture

It's the weather stupid

Fri, 05/23/2014 - 15:48 | 4789564 FuzzyDunlop21
FuzzyDunlop21's picture

If anyone is feeling daring, double down on Sarepta, as they do actually have some sound science behind some of their therapeutics. 

Fri, 05/23/2014 - 16:14 | 4789653 pitz
pitz's picture

Surprised to see GenCorp (GY) down so much.  They're the owners of Aerojet-Rocketdyne, which certainly should be a beneficiary of the situation concerning the USA and Russia in the area of space launchers and ICBM renewal.

 

Fri, 05/23/2014 - 16:20 | 4789669 taketheredpill
taketheredpill's picture

 

 

Smith & Wesson?

Fri, 05/23/2014 - 16:42 | 4789726 dobermangang
dobermangang's picture

It's a lot of liberals shorting the gun stocks.  SWHC and RGR are doing very well.  People shouldn't use emotion when making investing decisions.  Guns are one of the few things still selling well.

 

http://finance.yahoo.com/news/worry-short-interest-smith-wesson-12144677...

Fri, 05/23/2014 - 20:22 | 4790156 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

"Guns are one of the few things still selling well."

And ammo would be selling well if there was any on the shelves!

 

Do NOT follow this link or you will be banned from the site!