Short Selling: Karl Loomes Shares The Six Hottest U.S.-Listed Stocks

• SunGard's Astec Analytics looks into short-selling activity every week.
• This week’s top pick, from a securities lending perspective, was Valeant Pharmaceuticals Intl Inc VRX, which is down roughly 25 percent on Wednesday trading.
• Other stocks that are seeing substantial short-selling activity included Chesapeake Energy Corporation CHK, GoPro Inc GPRO, VMware, Inc. VMW, United States Steel Corporation X and Fitbit Inc FIT

SunGard's Astec Analytics provides intraday short-selling market data via securities lending analytics. In a recent report sent to clients, the firm shared a “roundup of some of the hottest stocks from a securities lending perspective.”

So, let’s take a look at Karl Loomes’ list of top stocks in the Americas from a security lending perspective.

Valeant Pharmaceuticals

The Canadian drug firm was the firm’s top pick for the Americas this week after management “confirmed that U.S. federal prosecutors were investigating its drug pricing methods, wiping nine percent from its shares when announced.”

Despite the fact that the shares managed to recover in the latter half of last week, data from Astec Analytics hinted at “short sellers building positions consistently for the past four weeks, in which time borrowing volumes in Valeant have climbed 60 percent,” the report explained.

Chesapeake Energy

Chesapeake got the second spot in Loomes’ list this week. The expert noted that, the stock “continues to garner interest after its downgrading by S&P earlier this month, though official exchange figures of increasing short selling activity in September have also brought renewed focus.”

“That said, Astec’s borrowing figures, the prerequisite and thus proxy for short selling, suggest that following on from what the official figures show, the latest action on this side of the market has in fact been downward,” the report added. In fact, the firm’s data showed the number of shares being borrowed at Chesapeake has in fact decline by more than 10 million shares since the start of the month.

GoPro

GoPro is another recurring name at Astec’s list. The analyst assures the stock saw fresh interest this week after announcing a partnership with the USC School of Cinematic Arts, “part of its new launch of the GoPro Awards – an ‘always on’ content platform that is said to reward the GoPro community by highlighting uploaded media content for inclusion in its channel programing.”

The stock saw “fairly neutral trading in the cash market during the week.” However, the firm’s data “hints at continued growth in short selling positions, with borrowing volumes now up about 70 percent compared to this time last month.”

VMware

The third spot in the list was occupied by VMware, which saw increased interest after Dell announced it would be purchasing the company’s majority owner, EMC Corporation EMC, in a $67 billion deal, taking over roughly 97 percent of shareholder voting rights.

“While the share price plummeted on the news, Astec’s data also suggests short sellers increased positions in the firm at a rapid pace – borrowing volumes rocketing by about 130 percent last week, hitting the highest levels in about 12 months,” Loomes expounded.

United States Steel Corp.

United States Steel rose one place in the list this week, and continued to witness interest “in the wake of the Ontario Superior Court of Justice’s approval of the separation of the company’s Canadian unit, with additional vigor coming after Moody’s said it was placing the company’s rating on review for downgrade.”

This event seems to have triggered a “resurgence in demand to borrowing the stock, with the cost of borrowing it climbing from about four percent at the start of the week to more than 12 percent by Friday’s session,” the research note explicated.

Fitbit

Finally, there’s Fitbit, which saw fresh focus after Pacific Crest said that, “the company was holding up well against competition in the wearable industry.”

While the stock price made rose slightly during the week, the securities lending figures indicate a small lapse in demand to borrow the stock, “with the cost of doing so falling from almost 40 percent two weeks ago to about 30 percent today.”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.