In selecting long and short candidates for his Master Portfolio, Bernie Schaffer uses a strategy called "expectational analysis" which combines fundamental, technical, and sentiment-based metrics. Based on this approach, the editor of Schaeffer Investment Research discusses a pair of new short sale ideas.
I have initiated a short position in Yelp! (YELP). The stock has been a laggard in the social media space and the equity is down over 13% in 2015. On a year-over-year basis, shares of YELP are down nearly 50%.
Short interest, as a percentage of the stock's float, is over 16%. Short sellers have clearly been in control of this name, indicating that any rallies have been short-lived.
Finally, 19 of the 28 analysts covering YELP maintain a buy rating. Should these analysts downgrade the equity, this could add to the already weak price performance.
I have also initiated a short position in Wynn Resorts (WYNN). The company—and many other major casino names—have been major laggards for some time now.
On a year-over-year basis, WYNN is down nearly 30%. Shares of WYNN are also trading below most major moving averages, confirming the downtrend that has been in place since last year.
On the sentiment front, over 6% of the stock's float accounts for short interest and the shorts have clearly been in control of this name.
Furthermore, there is not one sell rating on the firm and any downgrades could lead to additional selling pressure.
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