Short Sale Stocks: The 5 Companies Bears Love to Hate

WASHINGTON, DC - MARCH 05: Grover Norquist, President, Americans for Tax Reform, is interviewed by SiriusXM Patriot host Andrew Wilkow at SiriusXM Studio on March 5, 2013 in Washington, DC. (Photo by Leigh Vogel/Getty Images)
Leigh Vogel, Getty Images
The market hit a series of fresh highs this month, but there's no shortage of bears betting that share prices will soon fall. A whopping 13.3 billion shares were sold short on the New York Stock Exchange as of the end of last month. Nearly 7.5 billion more shares have been shorted on the tech-heavy Nasdaq.

In a nutshell, selling short means reversing the traditional buy and sell order of a stock transaction. Therefore a short profits from falling prices -- but takes a hit when the market heads higher. (For a bit more background, here's how it works: An investor borrows shares from a broker through an order to sell short. The investor must, at some later point, close out that position by placing a buy order to cover the short. This sort of transaction can be dangerous given the unlimited downside if a stock shoots higher. But it can be lucrative if a shorted stock falls.)

So which stocks are on the most-shorted list?

With 20.8 billion shares sold short between the country's two leading exchanges, there are plenty of prolific companies with huge bearish positions. Here are five with the largest short positions as of the end of February.
Feb. 28 Dec. 31
Sirius XM Radio (SIRI) 414.0 million 355.4 million
Nokia (NOK) 338.0 million 291.7 million
Frontier Communications (FTR) 227.6 million 212.5 million
Intel (INTC) 216.0 million 215.5 million
Bank of America (BAC) 161.3 million 186.6 million
Source: Barron's.

Why these companies? Let's dig a little deeper:

Motley Fool contributor Rick Munarriz owns shares of Bank of America. The Motley Fool recommends Intel. The Motley Fool owns shares of Bank of America and Intel. Try any of our newsletter services free for 30 days.

Increase your money and finance knowledge from home

Bonds for Beginners

Learn about fixed income investments.

View Course »

Investor’s Toolbox

Improve your investing savvy with the right financial toolset.

View Course »