As Ackman’s Herbalife Saga Hits the Big Screen We Look at 4 Other Heavily-Shorted Stocks

‘Betting on Zero’, a documentary directed by Ted Braun, brings to life Bill Ackman‘s $1 billion short against Herbalife Ltd. (NYSE:HLF), which first came into the public eye towards the end of 2012. Whether a pyramid scheme or not, the fact of the matter is that Herbalife’s shares are trading at a level which is 80% more than Ackman’s break-even price. While the relation between stock price and short interest surrounding a particular company might not always hold (as in the case of Herbalife for example), it is certainly helpful for investors to understand and be wary of the bearish sentiment hanging over the firms that they might be considering going long on. For the more daring investors looking to short overvalued stocks themselves, the prevalent short interest could also serve as a useful metric for them. Keeping these arguments in mind we have jotted down a list of five companies that sport a high volume of short interest as of March 31.

Our research at Insider Monkey determined that following the small-cap stocks, that hedge funds are collectively bullish on, can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

#5 Apple Inc. (NASDAQ:AAPL)

 – Volume of Shares Short (as of March 31): 55.51 million

 – Short Interest (in terms of float percentage as of March 31): 1%

Short interest in the Cupertino-based tech giant rose by 5.4% during the second-half of March. Based on the stock’s average daily volume, it would take about two days to cover all of the short positions. Although Apple Inc. (NASDAQ:AAPL)’s share price is up by a modest 1.8% since the start of the year, it is down by more than 14% in the last 12 months. After cutting production by 30% in the first quarter, Apple is likely to stick with the same depressed level of manufacturing in the second quarter as well, according to the company’s parts suppliers. Paul Orlin and Alex Porter‘s Amici Capital disposed of its entire Apple Inc. (NASDAQ:AAPL) stake, which was formerly comprised of 200,000 shares, during the fourth trimester.

#4 Micron Technology, Inc. (NASDAQ:MU)

 – Volume of Shares Short (as of March 31): 69.82 million

 – Short Interest (in terms of float percentage as of March 31): 6.8%

Between the 15th and 31st of March, short interest surrounding Micron Technology, Inc. (NASDAQ:MU) rose by more than 23%. Shares of the $11 billion provider of semiconductors have continued on their downward trajectory, losing over 24% of their value year-to-date. While the company is facing near-term weakness in demand for its memory products, some analysts are now seeing bright prospects for the company in the long-term. Raymond James recently upgraded the stock to ‘Strong Buy’ from ‘Outperform’, citing that flash memory is continuing to take more market share from hard disk drives. Iridian Asset Management, which is led by David Cohen and Harold Levy, upped its stake in Micron Technology, Inc. (NASDAQ:MU) by 16% to 11.42 million shares during the fourth quarter.

BlackBerry and Sirius XM are among the stocks covered on the next page which sport a high volume of short interest as of March 31.

#3 BlackBerry Ltd (NASDAQ:BBRY)

 – Volume of Shares Short (as of March 31): 75.57 million

 – Short Interest (in terms of float percentage as of March 31): 14.5%

During the latter half of March, the short interest in the $3.7 billion provider of mobile communications and services increased by 1.2%. It would take about 16 days to cover all of the short positions, if we take into account the stock’s average daily volume. So far this year, BlackBerry Ltd (NASDAQ:BBRY)’s shares have plummeted by more than 22%. The early smartphone pioneer delivered fairly disappointing financial results for the fourth quarter recently, as revenue of $487 million not only came $76.18 million below analysts’ estimates, but also marked a 26.2% decline from the same period of last year. The company is planning to launch two mid-range Android phones this year after its first Android phone Priv turned out to be too expensive to gain respectable traction, despite being generally well received by critics. Jim Simons’ renowned managed futures fund Renaissance Technologies was bullish on BlackBerry Ltd (NASDAQ:BBRY) during the October-December period, as it raised its stake in the company by 7% to 13.19 million shares.

#2 Sirius XM Holdings Inc. (NASDAQ:SIRI)

 – Volume of Shares Short (as of March 31): 163.16 million

 – Short Interest (in terms of float percentage as of March 31): 8.5%

The $19.6 billion satellite radio operator that boasts 29.6 million subscribers has seen its stock price slide by about 3.7% on a year-to-date basis. Sirius XM Holdings Inc. (NASDAQ:SIRI)’s subscribers increased by 5% in 2015, and the company is now targeting the used-car market, where it has a much lower penetration rate, to grow further. Investors are perhaps cautious about the increase in the company’s subscriber acquisition costs, as reported in its latest 10k filing. Then there is also the feeling that auto sales might have peaked last year, given that the economic indicators are pointing to a weaker 2016 for the industry. Steve Owsley‘s Madison Street Partners sold its entire 685,400-share Sirius XM Holdings Inc. (NASDAQ:SIRI) position during the fourth quarter.

#1 Herbalife Ltd. (NYSE:HLF)

 – Volume of Shares Short (as of March 31): 22.99 million

 – Short Interest (in terms of float percentage as of March 31): 26.7%

Shares of the $5 billion nutrition company have surged by about 8.4% so far this year, mostly on the back of fourth quarter financial results that beat analysts’ estimates. Herbalife Ltd. (NYSE:HLF)’s confession in early March that it had misstated the number of active new members of its service, a metric that it used to defend itself against Ackman’s accusations, has done little to dissuade investors. New York state senator Jeff Klein, who has previously echoed Ackman’s stance on Herbalife, recently claimed to have found more victims of the company in addition to the 56 people on his list from last October, who had lost about $20,000 each on average. Israel Englander’s Millennium Management and Paul Tudor Jones‘ namesake fund Tudor Investment Corp disposed of their entire Herbalife Ltd. (NYSE:HLF) holdings during the fourth quarter.

Disclosure: None