Bears Giving Up: 10 Small Cap Stocks With Decreasing Short Interest

The following is a list of small cap stocks, with market caps smaller than $2.0B. All of these stocks have seen a significant decrease in shares shorted between 9/30 - 12/31.

Short sellers seem to think the upside potential outweighs the downside potential of these names -- what do you think? Full details below.

Short trends data sourced from AOL Money, short float and performance data sourced from Finviz.

Interactive Chart: Press Play to compare changes in market cap for the top six names mentioned below. Note: The numbers on top of items represent the forward P/E ratio, if available.

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The list has been sorted by the change in shares shorted over the last three months.

1. Sonic Solutions (SNIC): Business Software & Services Industry. Market cap of $728.43M. Shorted shares decreased from 13.85M to 6.57M over the last three months (-53% change). Short float at 15.34%, which implies a short ratio of 4.17 days. The stock has gained 72.55% over the last year.

2. Cavium Networks, Inc. (CAVM): Semiconductor Industry. Market cap of $1.77B. Shorted shares decreased from 13.25M to 8.07M over the last three months (-39% change). Short float at 18.97%, which implies a short ratio of 7.08 days. The stock has gained 74.57% over the last year.

3. Fuel Systems Solutions, Inc. (FSYS): Auto Parts Industry. Market cap of $497.41M. Shorted shares decreased from 5.85M to 3.57M over the last three months (-39% change). Short float at 26.83%, which implies a short ratio of 11.63 days. The stock has lost -26.94% over the last year.

4. iStar Financial Inc. (SFI): REIT Industry. Market cap of $755.18M. Shorted shares decreased from 29.33M to 17.92M over the last three months (-39% change). Short float at 21.54%, which implies a short ratio of 9.05 days. The stock has gained 142.73% over the last year.

5. Coinstar Inc. (CSTR): Business Equipment Industry. Market cap of $1.31B. Shorted shares decreased from 10.99M to 6.99M over the last three months (-36% change). Short float at 23.49%, which implies a short ratio of 3.8 days. The stock has gained 58.15% over the last year.

6. Cabela's Inc. (CAB): Sporting Goods Stores Industry. Market cap of $1.47B. Shorted shares decreased from 10.56M to 6.94M over the last three months (-34% change). Short float at 15.72%, which implies a short ratio of 14.85 days. The stock has gained 31.87% over the last year.

7. Strayer Education Inc. (STRA): Education & Training Services Industry. Market cap of $1.67B. Shorted shares decreased from 3.8M to 2.51M over the last three months (-34% change). Short float at 18.63%, which implies a short ratio of 8.13 days. The stock has lost -44.62% over the last year.

8. Athenahealth, Inc. (ATHN): Business Services Industry. Market cap of $1.5B. Shorted shares decreased from 10.12M to 6.91M over the last three months (-32% change). Short float at 21.51%, which implies a short ratio of 12.11 days. The stock has gained 5.08% over the last year.

9. Life Time Fitness Inc. (LTM): Sporting Activities Industry. Market cap of $1.68B. Shorted shares decreased from 8.99M to 6.16M over the last three months (-31% change). Short float at 15.88%, which implies a short ratio of 16.62 days. The stock has gained 74.47% over the last year.

10. Skechers USA Inc. (SKX): Textile Industry. Market cap of $1.01B. Shorted shares decreased from 9.19M to 6.37M over the last three months (-31% change). Short float at 18.05%, which implies a short ratio of 3.45 days. The stock has lost -27.46% over the last year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.