Five S&P 500 Stocks With Rising Short Activity
By Market News Video Staff, Thursday, August 10, 2:31 PM ET
The most recent short interest data has just been released for the 07/31/2017 settlement date, and we here at Dividend Channel have sifted through this fresh data and screened out these five S&P 500 stocks. A metric we find particularly useful when comparing short interest data is the "days to cover" metric because it considers both the total shares short and the average daily volume of shares traded. For the five stocks below, we have detected a notable change in days to cover, not just from the prior reporting period but also going back a full month. The table below summarizes what we found, with the five columns showing data for each of the five stocks, and the rows showing the days to cover values first from the 06/30/2017 reporting period, then the most recent 07/31/2017 reporting period, followed by the change and percentage change:
At Alexandria Real Estate Equities Inc (NYSE:ARE), average daily volume at the 07/31/2017 settlement saw a decrease to 469,466, as compared to 1,040,359 at the 06/30/2017 report. That brought days to cover up to 14.01, a 125.01% increase from the 6.23 days to cover calculated at the 06/30/2017 settlement date. Looking at total shares short, there was a 99,462 share increase to 6,579,510, a rise of 1.53% since 06/30/2017. The below chart shows the historical days to cover for ARE at previous short interest release dates:
Meanwhile at CenturyLink, Inc. (NYSE:CTL), average daily volume at the 07/31/2017 settlement moved lower to 7,263,298, as compared to 14,136,213 at the 06/30/2017 report. That brought days to cover up to 15.70, a 95.76% increase from the 8.02 days to cover calculated at the 06/30/2017 settlement date. Looking at total shares short, there was a 658,904 share increase to 114,005,333, an increase of 0.58% since 06/30/2017. The chart below shows the historical days to cover for CTL at previous short interest release dates:
Over at Signet Jewelers Ltd (NYSE:SIG), average daily volume at the 07/14/2017 settlement decreased to 1,343,502, as compared to 2,884,113 at the 06/15/2017 report. The resulting days to cover value was up to 11.13, a 157.54% increase from the 4.32 days to cover calculated at the 06/15/2017 settlement date. Looking at the running total of all outstanding shorted shares, there was a 2,489,001 share increase to 14,954,241, a 19.97% increase since 06/15/2017. The below chart plots the historical days to cover for SIG at prior short interest release dates over time:
At IHS Markit Ltd (NASDAQ:INFO), average daily volume at the 07/31/2017 settlement declined to 1,640,278, as compared to 5,199,510 at the 06/30/2017 report. The days to cover calculation moved up to 8.97, a 231.06% increase from the 2.71 days to cover calculated at the 06/30/2017 settlement date. Looking at the total of all open short positions, there was a 625,012 share increase to 14,706,941, a 4.44% rise since 06/30/2017. The chart below shows the days to cover over time for INFO at previous short interest release dates:
And at Regency Centers Corp (NYSE:REG), average daily volume at the 07/31/2017 settlement decreased to 707,051, as compared to 1,844,766 at the 06/30/2017 report. That brought days to cover up to 8.78, a 190.34% increase from the 3.02 days to cover calculated at the 06/30/2017 settlement date. Looking at total shares short, there was a 628,968 share increase to 6,205,588, an increase of 11.28% since 06/30/2017. The following chart plots the historical days to cover for REG at previous short interest release dates over time:
An increased "days to cover" value could indicate that short sellers are using these stocks to hedge long bets elsewhere, or could also mean that short sellers believe the stocks will decline in price. When short sellers eventually cover their positions, by definition there must be buying activity because a share that is currently sold short must be purchased to be covered. So investors tend to keep an eye on that days to cover metric, because a high value could predict a sharper price increase should a company put out some unexpectedly good news — short sellers might then rush to cover their positions, and if the days to cover number is high, it would then be more difficult to close those positions without sending a stock higher (until the higher price produces enough sellers to generate the necessary volume the short sellers need to close their positions).
In afternoon trading Thursday, ARE was off about 0.7% on the day, CTL was off about 0.5%, SIG was down about 7.2%, INFO was off about 0.1%, and REG was down about 0.3%.
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