10 Worst Booming Stocks to Buy According to Short Sellers

6. International Paper Company (NYSE:IP)

Year-to-Date Performance as of September 14: 33.3%

Short % of Shares Outstanding as of September 14: 11.5%

Number of Hedge Fund Holders: 44

International Paper Company (NYSE:IP) is a paper and plastic packaging products and materials company. It sells renewable fiber-based packaging and pulp products.

This company had been garnering investor attention because of a potential acquisition by Suzano, a Brazilian company. However, the deal seems to be off, which is why International Paper Company (NYSE:IP) has ended up losing some investors who were hoping for a big premium from the acquisition. The deal fell through because International Paper Company (NYSE:IP) favored independence over consolidation.

Despite the attention lost through this development, International Paper Company (NYSE:IP) still seems like a good investment, seeing as it has been working to make operations more efficient while divesting lower-margin divisions. One such division is its cellulose operation, which, if sold off, would rake in at least $2 billion for International Paper Company (NYSE:IP).

However, International Paper Company (NYSE:IP) does have a rough journey ahead of itself, seeing as it has been underperforming on meaningful metrics for several years. The company’s sales, margins, and profitability have been on a general trend of decline. This, coupled with the Suzano deal falling through, may explain short sellers’ attitude toward International Paper Company (NYSE:IP). However, several hedge funds disagree with their sentiment and continue to hold stakes in this stock.

International Paper Company (NYSE:IP) was seen in the 13F holdings of 44 hedge funds in the second quarter, with a total stake value of $1.2 billion.

Diamond Hill Capital mentioned International Paper Company (NYSE:IP) in its second-quarter 2024 investor letter:

“Other top individual contributors in the quarter included Coherent and new holding International Paper Company (NYSE:IP). International Paper is one of the US’s largest manufacturers of containerboards, which is used to make corrugated boxes and other packaging materials. We expect that as the demand environment improves and the company focuses on its commercial execution, it will be able to improve profitability and bring operating margins back to normalized levels. Given what we view as an attractive valuation for a high-quality company, we capitalized on the opportunity to initiate a position in Q2. Shares subsequently rallied after reports that Brazilian company Suzano is interested in acquiring the company.”