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Best US shorts in 2013
10 December 2013
Despite a tough year, short sellers were able to find some pockets of opportunity
Short sellers managed to find opportunities in the North
American markets in 2013 despite the most heavily shorted
companies outperforming the S&P 500 index, according to
Markit Securities Finance.
The past 12 months have been tough for short sellers as the US
markets saw record highs.
"While many have noted that it's been a terrible year for short
sellers, with the most heavily shorted companies actually
outperforming the S&P 500 index, there have been stocks
where short sellers have called it correctly," said a
spokesperson for Markit.
The 20 best performing shorts fell by over 41% after seeing
short interest reach a new annual high.
"Volatile" pharmaceutical companies dominated the top short
list. Ariad Pharmaceuticals, which researches, develops and
commercializes the small molecule medicens for cancer
treatment, led the way as the worst perforing share.
Over the year short interest in the company reached 13 new
weekly highs. According to Markit, the best timed short sellers
took positions in late August, prior to a 76% decrease in the
Vical Inc had the highest average share price
underperformance, falling by 63% on average after 12 new annual
highs in demand to borrow. The firm develops gene-based cancer
treatments and infectious disease vaccines by using DNA
Gold presented an opportunity for short sellers as the price of
the commodity fell by 25%. Gold exploration and development
company Allied Nevada Gold suffered disappointing earnings and
its shares are down 88% year to date. However, Markit said that
short sellers were late to tap up this opportunity as demand to
borrow the firm's shares did not reach an annual high until
Short sellers benefitted from taking positions in Kirkland Lake
Gold whose share price fell 59%.
The most successful short of the year was Orbite Aluminae which
saw an 84% drop in share price following increased demand to
borrow in January.
J C Penny has been a popular short for several years but short
interest dropped to a low of 11% in the
summer which then jumped above 25% before
another big price decline. Short sellers targeted Angie's List
after its initial public offering in 2011 but it has not been a
good short trade until the latter half of this year.