January Effect Ideas: These 3 Stocks had a Bad Year, But Short Sellers Seem Bullish
Looking for rebound-ready stocks for the New Year?
We started with a universe of 185 stocks that have seen significant losses over the last year (at least -10%), in addition to accelerating losses over the last month (at least -5%).
In other words, price action suggests that many of these stocks are being sold to harvest tax losses. This would be promising data if you’re looking to gain from the January Effect.
Let me explain: The January effect is a phenomenon that makes prices of certain stocks rise more in January than the market averages. One of the theoretically causes is that at year’s end, investors sell losing stocks to better their tax returns. (Related: Should Facebook Be a Tax-Loss Sale?) The mass sell-off lowers prices of these loser stocks. In January, stocks are purchased back, and share price rises.
Recent price action suggests these names are being sold to harvest tax losses. We’re hoping to find the names amongst the sell-offs expected to quickly rebound. For that, we turn to short selling trends.
Short sellers make money when prices fall by. If they are bearish, they will increase their short positions. So we looked for stocks seeing the most significant decreases in shares shorted month-over-month. This indicates that short sellers are less bearish on these names than they were before.
Business Section: Investing Ideas for 2013
Recent price action suggests these names are being sold to harvest tax losses, and short sellers seem to think these stocks are ready to benefit from the January effect — do you agree? List sorted by annual performance.
1. MAKO Surgical Corp. (MAKO, Earnings, Analysts, Financials): A medical device company, markets its advanced robotic arm solution and orthopedic implants for orthopedic procedures in the United States and internationally. Market cap at $577.47M, most recent closing price at $12.57. Shares shorted have decreased from 13.14M to 12.11M over the last month, a decrease which represents about 2.56% of the company’s float of 40.31M shares. Days to cover ratio at 12.23 days. Annual performance: -52.9%. Monthly performance: -9.25%.
2. Blyth, Inc. (BTH, Earnings, Analysts, Financials): Operates as a multi-channel company in the home fragrance and decorative accessories industry. Market cap at $252.49M, most recent closing price at $14.80. Shares shorted have decreased from 4.66M to 4.46M over the last month, a decrease which represents about 2.12% of the company’s float of 9.44M shares. Days to cover ratio at 9.02 days. Annual performance: -48.24%. Monthly performance: -6.71%.
3. Glu Mobile, Inc. (GLUU, Earnings, Analysts, Financials): Engages in the design, marketing, and sale of casual and traditional mobile games worldwide. Market cap at $155.62M, most recent closing price at $2.36. Shares shorted have decreased from 13.94M to 12.88M over the last month, a decrease which represents about 2.18% of the company’s float of 48.54M shares. Days to cover ratio at 4.49 days. Annual performance: -28.4%. Monthly performance: -12.22%.
Hahahahahahaha joez ! that stock sucked for yeaaaaaaaarrrrrrrsssss. another lame ceo. followed it for a long time. good product.....very expensive, celebrities wear them.......stock did nothing but go down. have at it..you will have 2 losers....3 counting your boyfriend