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Number Cruncher

Where short sellers fear to tread Add to ...

What are we looking for?

Stocks that have attracted the least amount of short sellers. Investors have not been willing to bet that the prices on these stocks will decline in the coming weeks or months.

More about today’s screen

On Wednesday, we searched for the stocks on the Toronto Stock Exchange with the largest short interest ratio, which is calculated by dividing shares sold short on expectation of lower prices by the average daily volume of a stock. Today, we look at the other end of the spectrum, where short interest is lowest.

The screen lists those stocks that have a short interest ratio of less than one, ranked in ascending order. That means that for each of these issues, it would take less than a day of regular trading for all the short sellers to close out their positions. The screen also shows to what extent the short interest has changed over the last month, and we have filtered the search by listing only the stocks that have seen an increase in short interest during that period.

What we found

Twenty stocks made the list, topped by Capstone Mining, a Vancouver-based company that operates copper, silver, lead and zinc mines in Mexico and Canada. As base metal prices have soared, Capstone’s share price has more than doubled in the last 12 months. The stock was added to the TSX composite index only in December. The company has 200 million outstanding shares and a float of about 163 million shares.

Clearly, energy and metals companies generate the greatest optimism among investors today. They comprise two-thirds of our screen. There are also four finance-related stocks on the list, including Laurentian Bank of Canada, Intact Financial Corp. and GMP Capital Inc. Intact, which sells property and casualty insurance, adopted a poison pill this month, as a period of consolidation is expected to sweep the sector. GMP just closed a $100-million preferred share offering.

Tomorrow, we will look at some U.S. stocks whose short interest ratios merit attention.

 

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