With the recent upswing in stocks short sellers are looking for any chance to bet against a company.
UBS (NYSE:UBS) recently published a note showing which stocks their clients are shorting the most.
The reasoning for each stock’s short interest ranges from blatant overvaluation to tough competition and government policies.
JOHNSON & JOHNSON: Competition, patent loss and slowdown in pharmaceutical market
BANK OF AMERICA: Investors still weary of liability costs
Ticker: (NYSE:BAC) Shares short: 0.88%
Though its short share interest has decreased since last month, Bank of America was the hardest hit among large bank stocks because of concerns that it would have to pay billions in liability for foreclosure practices.
AT&T: Lost its hold on Apple with Verizon’s entrance
Ticker: (NYSE:T) Shares short: 0.93%
Some analysts consider the outlook for the stock to be too high considering it now has to share its crown jewel with Verizon.
AMAZON: Shares have dipped, new streaming service could hurt earnings
Ticker: (NASDAQ:AMZN) Shares short: 2.8%
UBS (NYSE:UBS) recently downgraded it because its new video streaming will impact margins. It said Wall Street’s estimates for the company were too high for the second half of the year.
GENERAL MOTORS: Profit fell short of expectations, position in China is under pressure
SALESFORCE.COM: Hypergrowth has slowed and increasing competition
Ticker: (NYSE:CRM) Shares short: 10.50%
The company posted strong earnings for the last quarter but some have argued that the stock price is way higher than it should be around $130 because Wall Street is so fascinated by cloud computing.
It also has Microsoft (NASDAQ:MSFT) as a competitor which just signed on for several cloud computing deals.
CHIPOTLE: Share pullback expected and food inflation impact
Ticker: (NYSE:CMG) Shares short: 11.8%
The stock was recently downgraded by a bunch of analysts over escalating food and labor costs.
The company has also recently had immigration problems.
FASTENAL CO: Slow store sales growth, vulnerable to the economy
Ticker: (NASDAQ:FAST) Shares short: 13.6%
The outlook for the construction company is mixed though it posted strong earnings recently.
A stunted economy could slow its goal of reaching $125,000 in monthly average sales per store by 2012.
LOGITECH INTL: Its computer products are becoming redundant plus flawed business model
CREE: Earnings miss, lowered its revenue guidance for next quarter
Ticker: (NASDAQ:CREE) Shares short: 22%
The company missed on both the top and bottom line for its fourth-quarter earnings and cited an “ongoing inventory correction” in Asia as a reason for the decline as well as lower-than-expected LED component sales.
U.S. STEEL: Cheaper overseas competition and price increases
Ticker: (NYSE:X) Shares short: 24.50%
The company also posted a net loss of $482 million for the last quarter because it burned through its cash in the last 12 months.
GREEN MOUNTAIN COFFEE: Rushed expansion and increasing coffee prices
Ticker: (NASDAQ:GMCR) Shares short: 24.50%
Last year the company bought up a bunch of its rivals at a very fast pace and it had over $335 million in debt by the end of the year.
The price of coffee is also on the upswing which is hard on the entire industry.
FIRST SOLAR: Stock is shorted due to new government industry policies
Ticker: (NASDAQ:FSLR) Shares short: 28.8%
The solar industry is under threat from new government policies capping installations and it is predicting lower sales for 2011.
NETFLIX: Transitioning business model, heavy competition, sky-high valuation
Ticker: (NASDAQ:NFLX) Shares Short: 36.3%
Its price to earning’s ratio is too high to sustain. According to Yoni Jacobs “Though the technicals visible in price levels still don’t point to a NFLX correction, the candlestick patterns do.”
Several brokers have recently cut their ratings on the stock.