3 Semiconductor Stocks With Soaring Short Interest

In regard to leading semiconductor stocks, there was little sign of consensus among short sellers between the April 15 and April 30 settlement dates.

Maxim Integrated Products Inc. (NASDAQ: MXIM), STMicroelectronics NV (ADR) (NYSE: STM) and Texas Instruments Incorporated (NASDAQ: TXN) saw the largest upswings in the number of shares short during the period.

Below is a closer look at how these three stocks have fared recently and what analysts expect from them. That is followed by a glance at the short interest moves in other key chip stocks.

Maxim Integrated Products

The number of shares sold short in this San Jose, California-based company jumped nearly 33 percent to almost 6.53 million shares in the final weeks of the month. That was more than 2 percent of the float, and it ended six straight periods of shrinking short interest. The days to cover was more than two.

Catalysts in the second half include Samsung Galaxy and Apple Watch releases. The company has a market capitalization of more than $9 billion and a dividend yield of about 3.4 percent. The price-to-earnings (P/E) ratio is higher than the industry average, but so is the operating margin.

The consensus recommendation of the analysts polled by Thomson/First Call is to hold shares, as it has been for at least three months. However, they believe the shares have some headroom, as their mean price target is almost 9 percent higher than the current share price.

The share price dropped more than 6 percent during the settlement period, though it is still up more than 2 percent year to date as of Wednesday's close. The stock has outperformed the broader markets over the past six months, though it has underperformed competitors Analog Devices and STMicroelectronics.

Related Link: Short Interest In Solar Stocks Continues To Dwindle

STMicroelectronics

Short interest in this Swiss integrated circuits maker rose more than 13 percent in late April to more than 2.21 million shares. Yet, that was about half the number of shares sold short in mid-January. At the current average daily volume, it would take less than two days to close out all of the short positions.

Bank of America recently downgraded STMicroelectronics, which has far underperformed the S&P 500 in the past year. The market cap is about $7 billion and a dividend yield near 4.4 percent. The long-term EPS growth forecast is about 49 percent, but the P/E ratio is greater than the industry average.

Half of the six analysts surveyed recommend buying STMicroelectronics shares, while the remainder rate the stock at Hold. Their mean price target is about 17 percent higher than the current share price. However, shares traded higher than that during the settlement period.

During the two-week period, the share price pulled back less than 3 percent, though it has recovered fractionally since. Yet, it is below both the 50-day and 200-day moving averages. Over the past six months, the stock has outperformed larger competitor Texas Instruments and the broader markets.

Texas Instruments

The number of shares short in this Dallas-based company swelled more than 20 percent in the most recent period to more than 20.71 million, the highest level of short interest since early in the year. That represented about 2 percent of the float, though the days to cover dropped to less than three.

During the period, Raymond James upgraded Texas Instruments to Strong Buy. The company has a market cap of almost $57 billion and a dividend yield near 2.5 percent. The operating margin is better than the industry average and the return on equity is almost 33 percent.

For at least three months, the consensus recommendation of the surveyed analysts has been to hold shares, though it has more Buy ratings than Underperform ones. A move to the mean price target would be a gain of about 5 percent. However, the share price was higher than that consensus target in the past month.

Short sellers watched the stock retreat more than 4 percent and drop below the 200-day moving average in the short interest period, and it has slipped a bit more since. Yet, over the past six months, the stock has outperformed not only competitor Qualcomm, but the S&P 500 as well.

Related Link: 3 Biotech Stocks See Growing Short Interest

And Others

In the final two weeks of the month, Altera Corporation (NASDAQ: ALTR), Broadcom Corporation (NASDAQ: BRCM), Cirrus Logic, Inc. (NASDAQ: CRUS) and KLA-Tencor Corp (NASDAQ: KLAC) also saw the numbers of their shares short grow by double-digit percentages, while short interest in Advanced Micro Devices, Inc. (NASDAQ: AMD), ARM Holdings plc (ADR) (NASDAQ: ARMH), Avago Technologies Ltd (NASDAQ: AVGO), Linear Technology Corporation (NASDAQ: LLTC) and NVIDIA Corporation (NASDAQ: NVDA) grew more modestly.

However, short sellers appeared to lose interest in Intel Corporation (NASDAQ: INTC), Micron Technology, Inc. (NASDAQ: MU), QUALCOMM, Inc. (NASDAQ: QCOM) and Xilinx, Inc. (NASDAQ: XLNX) – and especially in Applied Materials, Inc. (NASDAQ: AMAT) and Marvell Technology Group Ltd. (NASDAQ: MRVL) – in late April. But, the short interest in Lam Research Corporation (NASDAQ: LRCX) ended the period about where it began.

Disclosure: At the time of this writing, the author had no position in the mentioned equities.

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