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01/06/2006

Top 5 Most Shorted Software Stocks

Following up on a quick post I did on the Top 5 Internet Stock Short Positions at the end of 2005, I thought I would do the same analysis for the Software Sector.  It's interesting to note that most of the shorts are mid/small cap stocks even though large cap software stocks were some of the biggest losers last year.

To figure out just how short a stock is, I am taking the reported number of shares sold short as of mid-December and dividing it by the float (which is basically total shares out less insider shares).  Here are the Top 5 Software Shorts as of the end of 2005:

  1. Clickcommerce    Ticker: CLCK
    % of Float Short
    : 41.4% 
    P/E:
    16.2  Market Cap/Tangible Book: 31.0
    Comment: Kind of strange to see this stock so short given its low P/E, but apparently the pros think the earnings are bogus and a day of reckoning is coming.  Better come soon though as the stock was up 30%+ last year.
  2. Rightnow   Ticker: RNOW
    % of Float Short
    : 29.6%
    P/E: 103  Market Cap/Tangible Book: 15.3
    Comment: One of the few public SaaS stocks and one that has a large % of the stock still owned by insiders.  Looks like some pros don't buy the SaaS hype as the short position on this stock more than tripled last year.  I met the CEO and he doesn't seem like the type of guy to sell, so insider selling is not going to bail out the shorts here, it's going to have to be poor performance.
  3. TakeTwo Interactive    Ticker: TTWO
    % of Float Short
    : 21.6%
    PE: 31.6  Market Cap/Tangible Book: 3.3
    Comment
    : Maker of Grand Theft Auto series guilty of stealing from it's shareholders in the form of a 49% decline in it's stock price in 05. Pros apparently think the worst is yet to come as there are still over 15M shares short.
  4. Microstrategy    Ticker: MSTR
    % of Float Short
    : 21.5%
    PE: 20.5   Market Cap/Tangible Book: 7.4
    Comment
    : A long time short favorite thanks to numerous run-ins with the SEC. Pros obviously think "once a crook, always a crook".  I am actually long this stock which means I am pretty stupid and/or very forgiving, we will see!
  5. Convera   Ticker: CNVR
    % of Float Short
    : 20.4%
    PE: NA  Market Cap/Tangible Book: 10.2
    Comment: Enterprise search vendor that has shrewdly surfed the Google hype by announcing a series of web-based search initiatives.  My pick for "most likely to screw the pooch" in 2006.

January 6, 2006 in Software, Stocks | Permalink

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The thoughts and opinions on this blog are mine and mine alone and not affiliated in any way with Inductive Capital LP, San Andreas Capital LLC, or any other company I am involved with. Nothing written in this blog should be considered investment, tax, legal,financial or any other kind of advice. These writings, misinformed as they may be, are just my personal opinions.