Short_interestjan31_Orelli_2_18_2014

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Information about Short_interestjan31_Orelli_2_18_2014
Finance

Published on February 18, 2014

Author: TheMotleyFool

Source: slideshare.net

Description

Myraid Genetics, Sarepta Therapeutics, Questcor Pharmaceuticals, Ziopharm Oncology, and MannKind top the list of the most shorted biotechs.

5 Most Hated Biotechs

Defining “Hatred” • Biotechs listed on the NASDAQ with largest short as a percentage of float • As of latest data available on Jan 31, 2014 • Days to cover is defined as the short interest divided by the average daily volume – Longer days to cover can create short squeeze during a rally – Put another way, a longer “days to cover” indicates an increased conviction by short sellers

Myraid Genetics (Nasdaq: MYGN) • 51.2% of float sold short • Increase of 0.7% in outstanding short from Jan 15 to Jan 31 • 24 days to cover short interest • Bear thesis: Competition with Myraid’s BRCA1/BRCA2 test, BRACAnalysis, from other diagnostic test makers. Shares up 50% year to date.

Not a Bad Start to the Year

Sarepta Therapeutics (Nasdaq: SRPT) • 35.2% of float sold short • Increase of 5.2% in outstanding shares short from Jan 15 to Jan 31 • 4 days to cover short interest • Bear thesis: FDA won’t give Sarepta’s Duchenne muscular dystrophy drug eteplirsen an accelerated approval. Shares up 28% year to date.

Shorts Are Loosing Here Too

Questcor Pharmaceuticals (Nasdaq: QCOR) • 34.1% of float sold short • Decrease of 8% in outstanding shares short from Jan 15 to Jan 31 • 8 days to cover short interest • Bear thesis: Government is investigating Questcor’s promotional practices for its only drug Acthar. Shares up 27% year to date.

Sometimes One Drug Is All You Need

Ziopharm Oncology (Nasdaq: ZIOP) • 31.2% of float sold short • Decrease of 1.4% in outstanding shares short from Jan 15 to Jan 31 • 20 days to cover short interest • Bear thesis: Proof of concept clinical trial data on Ad-RTS-IL-12 in breast cancer, melanoma, and/or glioblastoma will fail.

Can’t Make Up Our Minds, Can We?

MannKind (Nasdaq: MNKD) • 30.2% of float sold short • Decrease of 11.5% in outstanding shares short from Jan 15 to Jan 31 • 9 days to cover short interest • Bear thesis: FDA won’t approve MannKind’s inhaled insulin Afrezza and/or the drug will be a commercial flop.

Talk About a Volatile Stock

Buy? Sell? Short? • A large short interest is a sign that other investors think shares will go down. • It’s not a sign that you should sell, but it’s important to investigate the bear thesis further. • In fact, investing against the crowd can be rewarding. A high short interest will exaggerate the move as shorts cover their positions.

The Motley Fool's chief investment officer doesn’t think you should short this company. In fact, it’s his No. 1 stock pick for 2014. You can find out which stock it is in our special free report. Just click the button below.

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