The government shutdown may be averted for a few months and the S&P 500 Index may have just hit new all-time highs, but a short seller is maintaining his aggressive stance against shares of International Business Machines Corporation (NYSE: IBM). This Dow Jones industrial Average just managed to hit new 52-week lows after its poor earnings report and it is now the worst performing DJIA stock so far of 2013. The management team at the Ranger Equity Bear ETF (NYSEMKT: HDGE) sent us confirmation that they are still continuing to press their short-sale against IBM’s stock price.

John Del Vecchio and Brad Lamensdorf, co-managers of the actively managed short-only ETF, have hit a winner since their first short sale alert in their bets against Big Blue. We would also point out that the 18.499 million shares short as of the September 30 short interest settlement date is literally just about 60,000 shares short of being at a year high.

Del Vecchio and Lamensdorf have several issues as the reason they are still willing to short sell IBM in their ETF that is run identically as a short-only hedge fund but with daily liquidity. The first is that revenue growth missed expectations by nearly $1 billion for a seventh shortfall as overall revenue was down over 4%.

The team also pointed out that almost half of the company’s earnings growth came from share buybacks. This was pointed out in the first “short sale alert” that the ETF team gave to us, and they said again that this “underscores how weak the overall business is performing.” Another issue is that cash flow is falling while net debt is increasing to further deteriorate IBM’s earnings quality.

Without a lower effective tax rate, the team maintained that IBM would have missed earnings significantly. It almost seems an after-thought at this point that foreign markets such as China were very weak.

IBM shares were at $174.02 shortly after noon EST, but the 52-week trading range is now $172.57 to $215.90. If you go back to the July 31 report when the Ranger Equity Bear team pointed out its reasons for betting so aggressively against IBM the stock was at $196 at the time. That is a drop of 11.2% since then. For comparison the DJIA is down by less than 0.5% while the S&P 500 index is up almost 4%.

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