TheStreet recently reported on the 10 most shorted stocks in the S&P 1500, using data compiled by market analytics firm, Bespoke. There were a few surprises on the list, and a few expected names -- most notably found in companies engaged in the energy sector. Real Money has taken a closer look at these shorts to see what is driving the bearish sentiment.
Here is the list of the 10 most shorted stocks ranked by shares held short as a percentage of their float. All data was current as of May 13.
10. Marriott International (MAR), 36.9% shares held short
Bearish sentiment surrounds Marriott as it nears completing its acquisition of fellow hotel brand Starwood Hotels & Resorts Worldwide (HOT). The combined companies are expected create the world's largest hotel chain with 1.1 million rooms in more than 5,500 hotels. But for all the potential advantages of the merger, there have also been concerns. Short interest in Marriott increased in March after China-based Anbang Insurance Group also made a bid to acquire Starwood. Although, Marriott was able to stave off Anbang's attack and keep the deal with Starwood alive, there are also questions about whether Marriott and Starwood will be able to integrate their two distinct corporate cultures and 30 brands. In an interview with CNBC Monday, Marriott CEO Arne Sorenson said he will have a "massive amount of work to do" that will take "some number of years to complete." Shares of Marriott currently trade for around $67.40 and are up 0.5% year to date.
9. Basic Energy Services (BAS), 38.2% shares held short
It may come as little surprise that this Texas-based oil and gas services provider is one of the most shorted stocks as it currently trades at around $2 and is down nearly 19% year to date. During the company's first-quarter earnings call in April, CEO Roe Patterson lamented that projects that were deferred from 2015 still weren't completed in the first quarter, which led to a 19% decrease in revenue. As a follow-up to earnings, analysts from BMO Capital Markets wrote that Basic Energy Services was in "survival mode" and that the company was "doing all it can do to preserve cash."
8. Bonanza Creek Energy (BCEI), 39.1% shares held short
The Colorado-based oil and gas company was dealt a number of blows this year. Shares currently trade around $3 and are down 43% year to date. Last month, Bonanza's borrowing base was cut to $200 million from $475 million during its semi-annual borrowing base redetermination. At the time of the review, Bonanza had $288 million outstanding under its credit agreement and it has several options for addressing the $88 million shortfall, according to filings with the Securities and Exchange Commission. The hit the company took from the borrowing base redetermination came three months after Bonanza Creek failed to sell its midstream unit, Rocky Mountain Infrastructure, to Riverstone Holdings for $225 million.
7. Carbo Ceramics (CRR), 42.6% shares held short
Yet another Texas-based oilfield services company faces pain as low energy prices persist. In addition to widely known troubles in the energy space, Carbo has also been hurt by lower-priced ceramic proppant from China taking market share. (Proppants are solid materials used in hydraulic fracking to keep wells open.) During an earnings call with analysts in April, management said sales volume decreased due to exploration and production operators electing to not complete wells they drilled due to pressure from lower commodity prices. Shares of the company trade around $14 and are down 18% year to date.
6. BofI Holding (BOFI), 43.9% shares held short
BofI Holding is the publicly traded holding company for BofI Federal Bank, which stands for "Bank of Internet," a California-based bank that offers loans to businesses and families. The bank operates from a single location in San Diego, which it says allows it to lower operating costs seen in branch-based banks, thus allowing it to pass savings to customers in the form of higher interest rates on deposits and lower rates on loans. Although an analyst team at Keefe, Bruyette & Woods has an Outperform rating on the company, it noted in a report last month that BOFI is frequently the subject of short-seller attacks and that it faces "significant legal issues" due to a former employee making allegations in his wrongful termination suit that the company misstated its financials. Shares of the company trade around $19 and are down 7% year to date.
5. Lannett (LCI), 44.4% shares held short
The Philadelphia-based generic pharmaceutical brand has faced scrutiny around the pricing of digoxin, a drug used to treat congestive heart failure. Last month, an analyst team from Oppenheimer noted that increases in the price of some of Lannett's other drugs may cause headwinds as the government continues to investigate prescription drug increases. The company recently purchased back $50 million of the $250 million aggregate principal amount of the 12% Senior Notes due in 2023 in an effort to tackle its $1 billion debt load, which is rated B+ (below investment grade) by S&P Global Ratings. Shares of Lannett trade around $25 and are down 39% year to date.
4. Outerwall (OUTR), 48.6% shares held short
As more viewable content shifts to online streaming, it may not be surprising that the company behind Redbox, the operator of automated DVD rentals is facing pressure from short-sellers. Despite the naysayers, shares of Outerwall are up 20% year to date and trade around $44. Outerwall is also the parent company of Coinstar, the company which operates kiosks that allow customers to convert their stacks of coins into cash. In March, the company announced that it is exploring "strategic and financial alternatives to maximize shareholder value." Some of the measures under consideration include right-sizing its Redbox and Coinstar businesses and developing new automated retail concepts through internal growth and acquisitions.
3. LendingTree (TREE), 50.7% shares held short
The Charlotte-based online market place for personal and business loans may be facing headline risks from the investigation into online peer-to-peer lender LendingClub (LC). To be sure, LendingTree's business allows consumers to price-compare loans from banks online, much like how Expedia (EXPE) matches consumers with hotels and airlines. Meanwhile, LendingClub actually provides loans to customers. (LendingTree includes LendingClub in its network of lenders.) The company may also face headwinds if the Federal Reserve increases interest rates, which could put downward pressure on the company's refinancing business, CEO Doug Lebda said in an interview with Jim Cramer last month on CNBC's 'Mad Money.' Shares of LendingTree trade around $90 and are up 0.5% year to date.
2. Adeptus Health (ADPT), 52.3% shares held short
Adeptus Health is a Texas-based health care organization that offers freestanding emergency rooms. Earlier this month, the company provided lower-than-expected second-quarter guidance, which caused the shares to drop as much as 16% in a single day. Adeptus is now guiding for second-quarter earnings in the range of $0.48 to $0.52 a share, down from previous projections of $0.57 a share, due to losses faced from First Texas Hospital and costs from launching new hospitals. Even so, the company raised its full-year earnings guidance to a range of $2.55 to $2.65, from $2.50 to $2.60, announced in April. Shares of the company trade around $61 and are up 13% year to date, though they have yet to recoup the steep drop experienced earlier this month.
1. Cal-Maine Foods (CALM) 55.3% shares held short
Cal-Maine is the largest producer of shell eggs in the U.S., and it sold more than one million dozen eggs in 2015. In its report, Bespoke said that the decline in Cal-Maine could be partly attributed to the fall in the price of eggs due to avian-flu worries. In a report last month, an analyst team at D.A. Davidson lowered its rating on Cal-Maine to Underperform from Neutral, citing insider sales by CEO Dolph Baker, volatility in egg pricing and lingering worries that avian flu may infect Cal-Maine's flock. Shares of Cal-Maine trade around $43 and are down nearly 7% year to date.