Small Cap Focus Print version
Updated: 01-Feb-07 14:30 ET
Small Cap Heavily Shorted Stocks for February
Nymex (NMX 127.34 -1.49)
The NYMEX is the world's largest exchange for the trading energy futures and options contracts (crude oil, unleaded gasoline, heating oil and natural gas).
This is a recent IPO that came public last November. It priced at $59, but opened at $120 and has done little since.
The main attraction of the shorts is the valuation. Among all the hot market-related stocks, NMX has the highest p/e of any of them by a wide margin. Current year p/e's: NMX at 58x, NYX at 42x, ICE at 40x, BOT at 39x, CME at 39x, ISE at 24x.
The nice thing about NMX is that it's so liquid (avg vol 1.4 mln), yet has a tiny float at 5.9 mln shares. Couple that with a 61% short interest (up from 38% last month) and it has the potential to be a mover.
Evercore Partners (EVR 32.94 -0.95)
Evercore is a boutique investment banking firm, with a heavy focus on mergers and acquisitions advisory services (86% of revs). The co is led by Roger Altman, the former US Deputy Treasury Secretary and Vice Chairman of The Blackstone Group.
The firm has been involved in some impressive deals, including GM selling a 51% interest in GMAC, AT&T/BellSouth, CVS and Caremark merger.
Also, the co is doing a better job of diversifying, extending more into restructurings, such as the recent Delphi deal.
This is a recent IPO, making its debut in Aug 2006 with a $21 offering price. As such, a concern would be the expiration of the IPO lock-up later this month.
Financial results have been impressive: Revenue for the 9 mos ended Sep 30 jumped 39% to $135 mln, adjusted EPS jumped 63% to $0.80 and perhaps most impressive is the co's pre-tax margin of 32%, that's some pretty big leverage to EPS on any revenue upside.
Bottom line, the tiny float at 2.9 mln and 30% short interest makes it an interesting name given its market position and financial results. The float will go up on the expiration, but it still should have a healthy short interest making it a name to watch.
Notable Increases in Short Interest
AGIX: The shorts are loading up here as its SI has jumped to 49% from 38%. This one looks like a high risk/high reward. In Dec 2005, AstraZeneca (AZN) agreed to pay AGIX up to $1 bln for exclusive rights to the atherosclerosis drug called AGI-1067 which is in Phase 3 trials and data is expected soon. On the one hand, analysts believe AGI-1067 has a high chance of failure. On the other hand, some firms have some pretty bullish price targets: Lehman at $50 and Lazard at $30. The stock would take off on good data.
AXR: As we mentioned last month, the one that continues to stands out here is Amrep. It's a play on the real estate market in New Mexico as it owns a large chunk of land in a fast growing area. The stock has finally seen some profit taking over the last couple of weeks. However, its short interest remains high at 84% and it has a tiny float of 1.8 mln shares so it still has the potential for a short squeeze.
JRCC: This coal company has seen its SI rise to 43% from 31% and the shorts have been right as the stock continues to slide. The co's Q3 report and guidance was pretty dismal.
NMX: Valuation appears to be the main concern for this recent IPO. Trading at a 58x p/e on 2007 consensus seems a bit rich even for the market-related stocks.
SPWR: Many solar stocks have been weak of late, but SPWR has bucked the trend. It looks like the shorts want to nip at this one following its 60% move since late Sep 2006 and given its p/e of 47x on 2007 earnings.
Notable Decreases in Short Interest
KKD: The shorts are starting to give up on this doughnut maker. The co finally filed restated results dating back to FY01, it settled a shareholder lawsuit, and it has sufficient cash to meet its liquidity needs. Now that KKD is getting its act together and the stock is rising, the shorts are looking elsewhere. (see our recent profile on KKD as a turnaround play)
AMWD: Despite a weak housing market, this stock keeps marching higher. After piling on the past few months, the shorts are losing faith here as its SI has fallen to 45% from 49% and 62% the last two months.
PARL: This stock's SI keeps falling as it's now at 44% from 49% a year ago. The stock has been beaten up, it looks like shorts are moving elsewhere.
NRPH: The shorts keep covering here as its SI has fallen to 33% from 36% and 41% the last two months as the co has been mentioned as a takeout candidate with SHPGY and AZN being mentioned as suitors. We'd expect more covering with that possibility out there.
Highly Shorted Stocks with Float of 10 Mln Shares or Less
We highlight these stocks for active traders looking for active traders looking for small floats and high short interest for a potential short squeeze. See Top 30 data for AXR, NMX, ESCL. Others include: NVEC 37% short interest, 4.4 mln share float; ZIPR 33%, 6.9 mln; TZOO 33%, 7.5 mln; IPA 33%, 3.4 mln; OHB 32%, 4.6 mln; HEI 32%, 6.6 mln; EVR 30%, 2.9 mln; MWY 29%, 7.3 mln; GROW 28%, 5.6 mln; GMXR 27%, 6.4 mln; CTRN 27%, 8.0 mln; RLRN 27%, 5.7 mln; SSYS 27%, 9.0 mln; FNET 26%, 2.9 mln; MGPI 26%, 9.5 mln.
Top 30 Most Highly Shorted Stocks
Rank Ticker % of Float Short - Jan % of Float Short - Dec % of Float Short - Nov Float (mln) Mkt Cap ($ mln) YTD Return
1 AXR 84% 80% 51% 1.8 $669 -18%
2 PWEI 69% 74% 53% 11.5 395 -4%
3 CCRT 69% 68% 34% 12.7 1,734 -12%
4 NMX 61% 38% n/a 5.9 11,440 +6%
5 ESCL 60% 60% 71% 8.4 101 -53%
6 BHS 56% 58% 62% 11.3 946 -5%
7 WCI 56% 51% 48% 31.7 855 +7%
8 NURO 54% 57% 57% 10.7 161 -14%
9 CORS 53% 52% 51% 34.2 1,195 -8%
10 IIG 53% 52% 54% 10.2 257 -27%
11 NYX 50% 44% 37% 53.0 15,741 +4%
12 RGC 49% n/a n/a 25.1 3,342 +4%
13 AGIX 49% 38% 34% 38.1 486 +24%
14 HWCC 49% 47% n/a 10.0 500 +15%
15 TRLG 48% 45% 49% 13.2 392 +11%
16 MDTL 47% 43% 43% 17.9 431 -23%
17 SUP 47% 50% 49% 20.2 541 +6%
18 TOA 46% 38% 37% 18.1 546 -10%
19 AMWD 45% 49% 62% 10.1 680 +4%
20 PARL 44% 49% 53% 13.7 103 +2%
21 BBW 44% 41% 41% 14.0 621 +8%
22 JOSB 44% 43% 44% 17.4 545 +3%
23 JRCC 43% 31% n/a 13.1 108 -30%
24 OVTI 42% 37% 34% 53.0 640 -15%
25 ASFI 42% 39% 34% 11.0 443 +6%
26 TTWO 42% 42% 47% 71.5 1,241 -4%
27 CROX 42% 41% 45% 28.6 2,010 +19%
28 FED 40% 39% 39% 15.4 1,141 +2%
29 KKD 40% 38% 41% 46.5 806 +16%
30 SPWR 39% 31% n/a 14.8 3,114 +21%
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