The most recent short interest data has just been released for the 06/30/2016 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 05/31/2016 reporting period, then the most recent 06/30/2016 reporting period, followed by the change and percentage change:
DLR | ABBV | BBY | EXPD | JWN | |
---|---|---|---|---|---|
05/31/2016 | 4.00 | 2.64 | 3.10 | 6.07 | 5.75 |
06/30/2016 | 13.20 | 8.69 | 6.90 | 9. |
9.14 |
Change | 9.20 | 6.06 | 3.80 | 3.70 | 3.39 |
% Change | 229.84% | 229.82% | 122.37% | 60.94% | 59.06% |
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At Expeditors International of Washington, Inc. (NASD: EXPD), average daily volume at the 06/30/2016 settlement declined to 1,380,176, as compared to 2,193,940 at the 05/31/2016 report. The days to cover calculation moved up to 9.77, a 60.94% increase from the 6.07 days to cover calculated at the 05/31/2016 settlement date. Looking at the total of all open short positions, there was a 165,626 share increase to 13,484,220, a 1.24% rise since 05/31/2016. The chart below shows the days to cover over time for EXPD at previous short interest release dates:
And at Nordstrom, Inc. (NYSE: JWN), average daily volume at the 06/30/2016 settlement decreased to 3,582,894, as compared to 5,598,392 at the 05/31/2016 report. That brought days to cover up to 9.14, a 59.06% increase from the 5.75 days to cover calculated at the 05/31/2016 settlement date. Looking at total shares short, there was a 578,179 share increase to 32,751,556, an increase of 1.80% since 05/31/2016. The following chart plots the historical days to cover for JWN 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).
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In afternoon trading Wednesday, DLR was trading flat on the day, ABBV was off about 1.3%, BBY was down about 1.6%, EXPD was trading flat, and JWN was off about 1.8%.