In a properly functioning market, stocks go up and down. Institutional investors drive the price action both ways. And when they speculate that a stock may go down, short interest in that stock goes up.
Long-term investors tend to avoid stocks with heavy short interest, and sometimes, there’s a good reason for that.
But short interest is not, by itself, bullish or bearish. It simply tells investors how analysts and institutional investors feel about a company. For example, they may believe a stock is simply overvalued at its current price.
But short interest can also indicate a deeper problem with the company.
At that point, it’s up to every investor to perform their own due diligence to understand if the high short interest is a temporary situation. And when you do, you may find that the shorts have it wrong.
But the opposite is also true. There are times when high short interest exists because the company is not fundamentally sound. In this case, seeing a stock with high short interest may be a reason for you to sell a stock.
In this special presentation, we’re analyzing seven stocks with high short interest and providing insights as to whether the market may or may not be getting them right.
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