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Pastimes : Trade Blogg Ideas Inter Alia

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From: Rutgers4/12/2005 1:07:27 PM
   of 285
 
Five Short Squeeze Plays

forbes.com

I like this as this reflects one of my strategies, but, gotta be careful due to naked shorters who may just sell shares they d/n take a loan for...

here's a snip from the article

...When traders think a stock will fall, they can make money selling it short. This involves borrowing shares and selling them in the hope of buying them back at a lower price. But evidence of short-selling doesn't always mean a stock is doomed. If the stock rises, short-sellers are often forced to cover their positions by buying back the borrowed shares they've sold. Such a "short squeeze" sometimes pushes the stock even higher.

To find a few short squeeze candidates, we looked for a 30% or greater rise in short interest (the amount of shares sold short but not yet repurchased) in the past month, as well as short interest greater than 2% of float. We also limited ourselves to stocks trading within 15% of their 52-week highs and those that have gained more than the S&P 500 over the past year. We took only companies with estimated three- to five-year (annualized) earnings growth of 10% or better.

Squeeze The Shorts
Company Price Industry 1-Month Change In Short-Interest* EPS Projected Growth** Market Value ($mil)
Brown-Forman (nyse: BF.B) $55.05 Beverages (Alcoholic) 61% 10% $6,964
Orient-Express Hotels (nyse: OEH) 26.83 Hotels & Motels 48 18 921
Playtex Products (nyse: PYX) 10.40 Personal & Household Products 49 10 637
Psychiatric Solutions (nasdaq: PSYS) 44.99 Health Care Facilities 38 20 920
SRA International (nyse: SRX) 64.00 Software & Programming 43 20 1,721

Prices as of April 11. *Month-over-month change in the total number of shares that have been sold short and not yet repurchased. **Annualized, projected next three to five years. Sources: FT Interactive Data, Reuters Fundamentals and Thomson First Call via FactSet Research Systems
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