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|
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.