Wolfe Research reveals its short stock ‘screen of all screens’

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Wolfe Research is out with its Hits List for short stock ideas taking into account a multitude of factors.

The “screen of all screens “identifies the stocks that appear most frequently on the firm’s 15 short screens.

“Our short screens comprise the 15 most potent valuation, earnings quality, capital creation, capital allocation, and sentiment metrics we’ve found in searching for ideas on which to complete additional fundamental analysis,” Chris Senyek, chief investment strategist, and team wrote in a note. “These short screens represent the backbone of the process we use into which to dig deeper and identify the most compelling short ideas.”

Those 15 screens are: bottom 20% earnings quality, high leverage, large net share issuance with negative FCF yields, worst stocks with a Wolfe Stock Idea Model rating of 5, high capex to trend and low free cash flow, decelerating EPS growth and low free cash flow, decelerating EPS growth and low free cash flow, potential value traps, non-GAAP earnings, post SPAC merger companies with unfavorable characteristics, increasing goodwill and intangibles and low ROA, insider selling at 52-week high, inventory growth and declining accrued expenses, CFO change and high accruals, post-IPOs with unfavorable characteristics and high bankruptcy risk.

The Hit List short idea stocks that appear on at least five of those screens are:

  1. Coupa Software (NASDAQ: COUP) short interest 10% of float, 7 hits
  2. Twilio (NYSE: TWLO)3.3%, 6
  3. Axon Enterprise (NASDAQ: AXON). 1.7%, 6
  4. Rapid7 (NASDAQ: RPD)7.9%, 6
  5. Bloom Energy (NYSE: BE)11.6%, 6
  6. Vicor (NASDAQ: VICR)5.2%, 6
  7. International Flavors and Fragrances (NYSE: IFF)2%, 5
  8. Crown Holdings (NYSE: CCK)2.5%, 5
  9. RingCentral (NYSE: RNG)9%, 5
  10. Advanced Drainage Systems (NYSE: WMS)2.7%, 5
  11. Five9 (NASDAQ: FIVN)6.4%, 5
  12. Chart Industries (NYSE: GTLS)12.8%, 5
  13. Sunrun (NASDAQ: RUN)17.6%, 5
  14. Digital Turbine (NASDAQ: APPS)5.5%, 5
  15. Chegg (NYSE: CHGG)6.2%, 5
  16. Ameresco (NYSE: AMRC)7.6%, 5
  17. NeoGenomics (NASDAQ: NEO)5%, 5

See JP Morgan’s top 2022 short sale candidates.

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