Revisiting Short Interest: Short Squeeze Candidates (PALM, GRMN, DISH)

As we saw yesterday, short sellers have increased their bets against several companies that we find interesting  and may be acted on.  Short sellers had covered their positions in Palm Inc (NASDAQ: PALM) but now they are back for blood with over 56 million shares short. The company has several new phones out and clearly the shorts think they know something. The short position rose by 8,837,683 shares as one of the biggest increases on an absolute basis on NASDAQ.

Every two weeks GoodMorningWallSt.com reviews the Top 50 NASDAQ Jumps in Shorts to identify where the shorts get challenged in the first few days after the short interest is released.  Another name with large increases and high short ratios is Garmin Ltd. (NASDAQ: GRMN), which is undoubtedly due to many betting that Google is going to pose much more serious competition with its free directional mapping in the Droid smartphones versus Garmin’s personal navigation devices which it sells and collects monthly subscription royalties over.  How much business Google utimately takes away is still very much up for debate, but the short interest rose from 16.125 million to a record high of 2009 at 19.66 million shares in the short interest.

Dish Network Corporation (NASDAQ: DISH) was another stock that fit the bill of large short interest increases with its short interest more than doubling.  Thomson Reuters is looking for earnings and revenue growth in 2010 as is, but that short interest rose from almost 4.7 million shares in mid-November to over 10.36 million shares by late-November.

The common denominator is that these companies could all benefit if the consumer does begin to spend again, and with short squeezes sometimes the news doesn’t even have to sound good.   Either way, looking for short squeezes often generates interesting names.  Yesterday we reviewed some low-priced outliers on the NYSE where there was a key trend seen.

Geoffrey A. Garbacz, GoodMorningWallSt.com