Related topics: stock market, Home Depot, investing strategy, Verizon, commodities
Rite Aid (RAD, news) and Home Depot (HD, news) saw the largest increases in short interest among stocks traded on the New York Stock Exchange in the second half of March, as investors turned more bearish on the stock market.
Short interest, which measures all uncovered short positions in securities, increased 0.9% to 12.64 billion shares between March 15 and March 31, according to the NYSE. Several stocks listed on the exchange had rapid increases in short interest during the period, some by as much as 233%.
Short positions are bets that a stock will fall. Investors borrow shares from a broker and sell them, with the understanding that they must be bought back later -- presumably at a lower price -- and returned to the owner.
The Standard & Poor's 500 Index ($INX) rose by 2.3% in the second half of March, recovering from its lowest point of the year, on March 16. The markets looked to have taken a turn for the worse in mid-March because of violent protests in the Middle East and North Africa, as well as the earthquake and tsunami that battered northeastern Japan.
But stocks pushed higher during the period despite a continued rise in the price of oil and other commodities, as well as the ongoing struggles by Japan to avert a nuclear catastrophe.
Short interest is one indicator that long investors in these stocks could be in for painful declines.
The following is a list of 10 stocks that saw the largest percentage increase in short interest from March 15 through March 31, ranked in reverse order. The data were pulled from the NYSE and NYSE Arca's top 100 positions, released on a bi-monthly basis.
10. Masco
Masco (MAS, news) manufactures, distributes and installs home-improvement and building products, including faucets, cabinets, architectural coatings and windows.
Short interest in the stock climbed 18.2% to 24.5 million positions as of March 31. The stock is down 5.0% over the past month. In February, shares of Masco fell sharply after the company said its fourth-quarter loss widened, falling short of Wall Street's consensus forecast.
9. Verizon
Verizon Communications (VZ, news) is a diversified telecommunications company. It offers cellphone service through its Verizon Wireless joint venture with British mobile provider Vodafone Group (VOD, news); it also offers high-speed Internet and landline telephone services.
Short interest in Verizon rose 19.2% to 43.9 million positions as of March 31. Shares in the company are up 4.1% over the past month. The stock initially climbed after rival AT&T (T, news) said it would buy T-Mobile USA, the nation's fourth-largest wireless provider.
8. Alpha Natural Resources
Alpha Natural Resources (ANR, news) supplies and exports metallurgical coal used in making steel. The company also supplies thermal coal to electric utilities and manufacturers. In January, the company said it would acquire troubled coal miner Massey Energy (MEE, news) for $7.1 billion.
Short interest in Alpha Natural Resources increased 20.8% to almost 27.5 million positions as of March 31. The stock is down 3.0% over the past month, despite investor expectations that coal will see a short-term benefit from the situation with Japan's nuclear plant.
7. Annaly Capital Management
Annaly Capital Management (NLY, news) is a real estate investment trust, or REIT. The company invests in mortgage pass-through certificates, collateralized mortgage obligations and other mortgage-backed securities.
Short interest in Annaly Capital rose 25% to more than 36 million positions as of March 31. The stock is down 2.8% over the past month.
6. Charles Schwab
Charles Schwab (SCHW, news) is engaged in securities brokerage, banking and related financial services.
Short interest in Schwab climbed 25.5% to almost 36.6 million positions as of March 31. The stock is up 2.5% over the past month. On March 21, Schwab announced a $1 billion stock deal to acquire optionsXpress (OXPS, news).
