2 Short-Squeeze Candidates That Could Go Parabolic Soon
Short squeezes can deliver enormous returns for investors in the blink of an eye. Several so-called "meme stocks" generated jaw-dropping gains for investors earlier this year due to this phenomenon.
The mechanics of a short squeeze are fairly straightforward. Short-sellers, or investors betting against an equity, are essentially forced to cover their position in response to an uptick in investors buying the stock. The net result, more often than not, is a brief, parabolic-like move higher in the stock in question.
Last month, short-sellers seemingly took advantage of the widespread weakness across the biopharma space. As a result, scores of biopharma equities sport sizable short positions as a percentage of the outstanding shares. The Alzheimer's specialist Cortexyme (NASDAQ: CRTX) and the commercial-stage biotech Heron Therapeutics (NASDAQ: HRTX) were two of the most heavily shorted pharma stocks at last count. These two drugmakers, however, could prove to be terrible stocks to bet against. Here's why.
Source Fool.com
