Blackberry shareholders get a taste for what might be in store

A short squeeze sent First Solar’s shares soaring yesterday. The same fate could await Blackberry holders.

Iain Butler

Chief Investment Advisor, Motley Fool Canada Fool since November 2012 Iain Butler, CFA, is Lead Advisor on Discovery Canada 2017. He is also the Chief Investment Advisor for Motley Fool Canada and is the lead advisor on its flagship Stock Advisor Canada product. Before joining the Fool, Iain was a “buy-side” analyst and through this experience is well-versed in the idiosyncratic ways of the Canadian market. His investing interests are centred on scouring the market for interesting businesses that trade at reasonable prices and offer an appealing risk/reward relationship. Since joining the Fool in 2012, Iain dedicates each day to spreading Foolishness throughout this great country!

Published April 10, 2013 11:28 am EDT

Yesterday, at its analyst day in New York, First Solar (NASDAQ:FSLR) released full-year 2013 guidance that sent the company’s stock rocketing higher. The stock registered a +46% surge that was chalked up to a massive short squeeze.

According to Capital IQ, First Solar entered Tuesday with an outstanding short position of 18.4 million shares or 21.1% of shares outstanding. That position was reduced by 2 million shares over the course of the day and closed out at 16.4 million (19% of shares outstanding).

Back in September, First Solar’s outstanding short position peaked at 31.9 million or 36.6% of shares outstanding. Since, this position has obviously been reduced and the stock has surged by about 75%.

Thought this was about Blackberry

Although they operate in very different businesses, Blackberry (TSX:BB,NASDAQ:BBRY) and First Solar do share at least one thing in common. In recent times, they have both been given up for dead by many an investor as indicated by the short interest in both companies.

When we last checked in mid-March, Blackberry’s short position stood at 147 million shares or 28.6% of shares outstanding. It now stands at 29.7%. Not the 36% that First Solar registered, but still growing steadily and certainly more than First Solar’s pre-Tuesday short interest. IF Blackberry is able to give a convincing indication in the coming months that it’s going to survive, as First Solar did, the short squeeze that will occur is going to act like rocket fuel for the company’s stock. Just like First Solar.

Though the shares could rip higher, Blackberry continues to be nothing more than a gamble and should be treated as such. However, Canadian investors deserve to own great businesses and the U.S. market is home to some of the best in the world. We have created a special FREE report that identifies 3 U.S. businesses that are worthy of your hard-earned investment dollars. Simply click here to receive “3 U.S. Stocks Every Canadian Should Own” – FREE!

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Fool contributor Iain Butler does not own shares in any of the company’s mentioned. The Motley Fool has no positions in the stocks mentioned above.