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Netflix is delivering big gains for investors in 2012.
By msnbc.com staff
How quickly love turns to hate -- and in the case of the stock market, from hate back to love again.
Shares of the companies that investors hated the most in 2011 have seen their prices increase twice as much as the benchmark Standard & Poor’s 500 stock index so far this year.
Those shares include Sears Holdings, which has posted 18 straight quarters of sales declines. Investors punished the retailer in 2011, sending its stock price down 57 percent, but its shares are up again so far this year, rising 73 percent.
Similarly, Netflix upset its customers with a price increase last year. Its share price ended the year down 61 percent, but has since rebounded and is up 76 percent so far in 2012.
Sears and Netflix were among 26 companies in the S&P 500 index with the highest so-called “short interest” relative to shares available for trading, Bloomberg News reports. Short interest measures the amount of the available shares in a company that are sold short -- that is, investors are betting that the price of the company’s stock will decline in value and are holding trading positions to profit from the drop.
The shares of these 26 companies have rallied 18 percent so far this year, Bloomberg notes, while the full S&P 500 index, a widely followed gauge of the overall U.S. equities market, is up 8 percent since the end of 2011. Because investors who sell short use shares they do not own for their trades, those investors who bet against Sears and Netflix have been hammered by their sharp price increases, as they will have had to buy more shares to “cover” their short positions.
The overall stock market has started the year on an upswing, reacting to upbeat data, including a decline in the unemployment rate, that suggest the economic recovery is gaining momentum. Another boost: indications that the European leaders are near a resolution to the region’s debt crisis.
The U.S. economy -- and potentially the global economy -- are getting stronger, and investors are more enthusiastic toward the stock market, according to investment adviser Richard Bernstein, CEO of Richard Bernstein Advisors.
U.S. assets will become increasing attractive over the next 12 to 18 months, Bernstein added. He appeared on CNBC Friday to explain his bullish outlook: