Hot Picks: Three U.S. stocks seen as ripe for shorting amid sector headwinds

Bloomberg10-21

As financial pressures mount across key sectors of the U.S. economy, some investors are taking a more defensive stance. From weakening consumer credit to overvalued cable and industrial names, the ...

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From weakening consumer credit to overvalued cable and industrial names, the risk of correction is growing.BNN Bloomberg spoke with Brad Lamensdorf, co-portfolio manager at Ranger Equity Bear ETF, who outlined three companies he believes are vulnerable to sharp downside moves and explained why his fund is positioning for potential declines.Key TakeawaysStanley Black & Decker’s financing arm has expanded to nearly half its sales, raising concerns about loan quality and the potential for future losses.Cable One’s high pricing amid an industry downturn makes it vulnerable to deeper declines as competition and subscriber losses intensify.Credit Acceptance Corp’s reliance on subprime auto credit and lofty valuation could trigger a 30 to 50 per cent drop if growth slows.Weakness in consumer credit and industrial demand is exposing balance-sheet risks in several U.S. companies.Short sellers are targeting overextended stocks in sectors where financial leverage and pricing power are deteriorating.Brad Lamensdorf, co-portfolio manager at Ranger Equity Bear ETF Brad Lamensdorf, co-portfolio manager at Ranger Equity Bear ETF Read the full transcript below:ROGER: Time now for Hot Picks. Usually our guests give us three of their top buys, but today we’re going to talk about three stocks you should short. Here to share his ideas is Brad Lamensdorf, co-portfolio manager at Ranger Equity Bear ETF. Brad, thanks very much for joining us today. Let’s get right into it. Your first short idea is Stanley Black & Decker. What caught your attention there?BRAD: About four or five years ago, we were short Snap-on for a while and covered it for a modest profit. We moved away when the company made some smart internal software investments that created a lot of value for shareholders. But over the last decade, Stanley Black & Decker has taken on a risky practice — using its finance arm to fund customer purchases. That arm has grown from about five per cent of gross sales to roughly 50 per cent today, similar to where Snap-on is.The problem is, when a company gets to those levels, it can make sales to customers who normally wouldn’t qualify for credit. We’ve seen this before with CarMax, which also relied heavily on financing to boost sales. Stanley’s loan exposure could create problems down the road.ROGER: When that financing exposure gets that high, the alarm bells go off. What level would you like to see it brought back down to?BRAD: Something closer to 20 to 30 per cent would be more conservative. They could also try to convince Wall Street that their credit book is strong, but there’s always the temptation to pull forward sales using discounts or balance-sheet manoeuvres. That might boost short-term results, but it makes it harder to sustain growth in the future.ROGER: Let’s move over to Cable One, or CABO.BRAD: We all know cable companies have been in decline. We’ve shorted several of them, and this is one we’ve been focused on most of the year. We covered when it fell earlier, but we’re back in again after the bounce. The issue is simple: pricing remains far too high relative to the market. We think they’ll need to cut prices to stabilize operations, and we see the stock closer to around US$75.ROGER: And your last short idea — Credit Acceptance Corp.BRAD: We’ve been short this one for a while. It’s been frustrating, but the risk dynamic remains. Subprime auto credit, or asset-backed securities credit, is extremely vulnerable — that’s part of what’s hurt CarMax. You’re going to see more of this with regional banks and other lenders as well.Credit Acceptance focuses entirely on this area, and what stands out to me as a short seller is valuation. It trades at about three times price-to-sales, while most companies in this space trade closer to one or one and a half. Take Ally, for example — it’s a similar business but trades far cheaper. When growth slows, Credit Acceptance could easily see its multiple cut in half, which implies a 30 to 50 per cent drop in the stock.ROGER: And how long do you typically hold these short positions?BRAD: This is one of our longer shorts. We generally hold for three to five quarters, and this one’s been about a year and a half. It’s been an underperformer, but it fits our strategy. We aim to generate alpha on the downside when markets fall and to limit losses when markets rise.This year, we’re about 1,500 basis points ahead of our benchmark. Last year, we were more than 1,000 points ahead. We don’t lose as much as shorting the indexes directly, and when markets drop, our short positions tend to underperform the benchmarks significantly — especially in names that have pulled forward business or lack the earnings power to buy back shares.ROGER: And how about your other shorts — Stanley Black & Decker and Cable One? How long have you held those, and what’s your outlook?BRAD: We’ve held Stanley Black & Decker for a couple of quarters. For Cable One, once it hits our price target, we’ll cover. We rarely expect anything to go to zero — usually, we’re waiting for the company to admit it needs to lower prices or guide down. That’s typically our catalyst to exit the short position.ROGER: Brad, thank you very much for joining us today.BRAD: Great, thank you.ROGER: Brad Lamensdorf, co-portfolio manager at Ranger Equity Bear ETF.DISCLOSUREPERSONALFAMILYPORTFOLIO/FUNDSWK NYSENNNCABO NYSENNNCACC NASDAQNNN---This BNN Bloomberg summary and transcript of the Oct. 20, 2025 interview with Brad Lamensdorf are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.35.9","shortVersion":"4.35.9","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2577621858","isCrawlerRequest":true}