As CIT struggled, short bettors got interested

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Related Articles 11/1/2009 CIT files for bankruptcy protection, expects 'swift emergence' 10/13/2009 Report: CIT likely to file for Chapter 11 as debt exchange hits snag 10/9/2009 MarketWeek: CIT at odds with certain bondholders in light of restructuring plans 10/1/2009 Fidelity National completes Metavante Technologies deal

Related Research Reports Completes Acquisition of Metavante Robert W Baird  10/2/2009 DBRS Downgrades CIT Group Inc. Long-Term Debt to C, Remains Under Review Negative DBRS Ltd  10/2/2009 TINY: Kovio--Another Potential Winner To Focus On ThinkEquity LLC  10/6/2009 Upgrading to Outperform – Positive on LT Growth Fox-Pitt Kelton  10/16/2009

Related Offerings 4/1/2009 $200M Common Equity 4/1/2009 $50M Common Equity 8/27/2009 $125M Junior Subordinated Debt

CIT Group Inc. and Convergys Corp. saw short interest relative to shares outstanding jump from Sept. 30 to Oct. 15, while Fidelity National Information Services Inc. and Harris & Harris Group Inc. saw the greatest declines.

CIT saw its short interest jump 365 basis points from Sept. 30 as the lender struggled to obtain the necessary support from bondholders for its restructuring and prepackaged bankruptcy plan. News outlets reported that the lender would likely file for bankruptcy amid a lack of interest from certain bondholders, and DBRS on Oct. 2 downgraded its long-term debt rating to C from CC, calling CIT's debt exchange "coercive" and a default by DBRS' definition. The long-expected bankruptcy filing did not happen until Nov. 1.

Following Convergys' oversubscribed exchange offer of up to $125 million in new 5.75% convertible debt due 2029 for up to $122.5 million of its outstanding 4.875% senior notes due Dec. 15, UBS Investment Research analyst Jason Kupferberg on Oct. 7 maintained a "neutral" rating on Convergys, adding that the company's fundamentals "are still under pressure."

Following the close of Fidelity National Information's deal with Metavante Technologies Inc., Robert W. Baird & Co. analyst David Koning on Oct. 2 raised his price target on Fidelity National Information to $28, calling the acquisition a positive with potential for cost synergies and long-term revenue cross-selling opportunities. Fox-Pitt Kelton Cochran Caronia Waller analyst Roger Smith on Oct. 16 upgraded the company to "outperform," adding that he expects Fidelity National Information can grow its top line 8% and see EPS growth of about 15%. Fidelity National Information's short interest decreased 875 basis points in the period, to 1.06%. Private placements that closed simultaneously with the Metavante deal increased Fidelity National Information's common shares outstanding by about 16 million shares.

Harris & Harris Group, which saw its short interest ratio decrease 362 basis points, completed a common stock offering Oct. 6, which increased the company's shares outstanding by 4,887,500 shares. ThinkEquity LLC analyst Michael Lew on Oct. 6 reiterated his "buy" rating and $8 price target on the company, pointing to its investment portfolio's inclusion of Silicon Valley company Kovio Inc. as a positive for the company.

World Acceptance Corp. continued to lead the companies with the most short interest relative to shares outstanding, with 32.09% of shares shorted as of Oct. 15, followed by Alliance Data Systems Corp.