Short selling is the act of selling a stock the seller does not actually own. In fact, while the seller does not actually own the stock, he still promises to deliver the stock to the buyer at an agreed-upon price. Essentially what happens in a short sale is a broker lends a seller a certain number of shares from that broker's inventory. The shares are then sold to a buyer, and the proceeds are credited to the seller's account. Eventually, the seller must close the short by buying back the same number of shares and returning them to the original broker.

If the price of the stock drops, the seller makes a profit by selling back the shares to the broker at a lower cost. If the price of the stock rises, the opposite happens and the seller loses money. When initiating a short, sellers are betting the stock price will fall, meaning they do not believe in the company's near future. The following are the top five most shorted NYSE stocks.

1. Vale S.A.

Vale S.A. (NYSE: VALE) has had an increase in shorted shares by more than 7% in September 2015, bringing the total shorted shares to 223.43 million. This signifies the highest level of short interest since last April, when the company had a year-to-date peak of nearly 250,000 shares. At the company's most recent average daily volume, it would take roughly nine days to cover all the short positions.

2. Chesapeake Energy Corporation

Chesapeake Energy (NYSE: CHK) has had a rising amount of short interest since the end of May, adding 5% in short interest since then to bring the amount of shorted shares to 217.6 million. This signifies roughly 33.1% of the company's float, and the days to cover the short positions have risen to 11. The company's share price has been flat of late, hovering around $7. The company's 52-week high of $25.46 was hit almost a year ago, and the $6.01 low was seen during the most recent short interest period.

3. Petróleo Brasileiro S.A.

Petróleo Brasileiro S.A. (NYSE: PBR), known as Petrobras, has actually seen the number of shorted shares slow down, with less than a 3% growth rate. This brings the total number of shares shorted to 137.64 million and the days to cover the short positions to around four. Due to the slowdown in share shorts, the year-to-date peak short interest of 146,000 shares was reached back in April 2015. However, analysts continue to lower expectations for Petrobras, and shares dropped by more than 21% in an August sell-off, only to rebound and end up roughly 3% lower than when the sell-off started. The stock is down roughly 33%.

4. Sprint Corporation

Sprint's (NYSE: S) short interest shrank by more than 6% in August, bringing the total number of share shorts to 135.70 million. This represents just under 20% of the float and constitutes the second largest number of shares shorted in the past 12 months. The days to cover the short positions have remained steady at three. Japanese firm SoftBank has increased its stake in Sprint and helped increase Sprint's share price by 21% in August. This is not a good sign for investors who have open short positions. The stock is up a total of 16%.

5. AT&T, Inc.

AT&T's (NYSE: T) 121.9 million shares shorted in the previous period was the lowest level of short interest in more than a year. However, the number of shares shorted in August grew by over 5 million to a total of 126.08 million. This represents 2.1% of the company's float and would take about three days to cover all of its short positions. This is down from more than 10 days in July, showing the short interest is declining. The company's 52-week range is $30.97 to $36.45.

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