Warner Chilcott Shares Popped: What You Need to Know

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of pharmaceuticals specialist Warner Chilcott (NAS: WCRX) rose more than 10% in early trading and remained up nearly that much at the close.

So what: We don't know exactly what caused the rally, but an ongoing unwinding of short positions in the stock may be partly to blame. On Monday, Reuters reported that Warner enjoyed the second-largest decline in short interest during the second-half of August.

Now what: Shorts redeemed more than 4.4 million shares between Aug. 15 and 31, down 58%.  Capital IQ shows similar data. The implication? A massive short squeeze has fueled returns recently. Fundamentals and valuation will have to do the job over the long term. Do you agree? Disagree? Please weigh in using the comments box below.

Interested in more info on Warner Chilcott? Add it to yourwatchlist.

At the time this article was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim'sportfolio holdingsandFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners