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Five S&P 500 Stocks With Rising Short Activity

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The most recent short interest data has just been released for the 08/31/2016 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 07/29/2016 reporting period, then the most recent 08/31/2016 reporting period, followed by the change and percentage change:

HST COL DLR HP FLS
07/29/2016 6.48 4.59 11.88 14.43 3.87
08/31/2016 13.72 11.30 18.47 20.68 9.62
Change 7.24 6.71 6.59 6.25 5.75
% Change 111.67% 146.18% 55.49% 43.31% 148.29%

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At Host Hotels & Resorts Inc (NYSE: HST), average daily volume at the 08/31/2016 settlement saw a decrease to 6,751,239, as compared to 13,060,882 at the 07/29/2016 report. That brought days to cover up to 13.72, a 111.67% increase from the 6.48 days to cover calculated at the 07/29/2016 settlement date. Looking at total shares short, there was a 7,968,569 share increase to 92,639,827.0, a rise of 9.41% since 07/29/2016. The below chart shows the historical days to cover for HST at previous short interest release dates:

Meanwhile at Rockwell Collins, Inc. (NYSE: COL), average daily volume at the 08/31/2016 settlement moved lower to 511,484, as compared to 1,085,977 at the 07/29/2016 report. That brought days to cover up to 11.30, a 146.18% increase from the 4.59 days to cover calculated at the 07/29/2016 settlement date. Looking at total shares short, there was a 794,653 share increase to 5,777,337.0, an increase of 15.95% since 07/29/2016. The chart below shows the historical days to cover for COL at previous short interest release dates:

Over at Digital Realty Trust Inc (NYSE: DLR), average daily volume at the 08/31/2016 settlement decreased to 1,314,468, as compared to 1,923,425 at the 07/29/2016 report. The resulting days to cover value was up to 18.47, a 55.49% increase from the 11.88 days to cover calculated at the 07/29/2016 settlement date. Looking at the running total of all outstanding shorted shares, there was a 1,430,745 share increase to 24,284,667, a 6.26% increase since 07/29/2016. The below chart plots the historical days to cover for DLR at prior short interest release dates over time:

At Helmerich & Payne, Inc. (NYSE: HP), average daily volume at the 08/31/2016 settlement declined to 1,303,614, as compared to 1,708,946 at the 07/29/2016 report. The days to cover calculation moved up to 20.68, a 43.31% increase from the 14.43 days to cover calculated at the 07/29/2016 settlement date. Looking at the total of all open short positions, there was a 2,298,600 share increase to 26,961,438, a 9.32% rise since 07/29/2016. The chart below shows the days to cover over time for HP at previous short interest release dates:

And at Flowserve Corp (NYSE: FLS), average daily volume at the 08/31/2016 settlement decreased to 739,581, as compared to 1,403,602 at the 07/29/2016 report. That brought days to cover up to 9.62, a 148.29% increase from the 3.87 days to cover calculated at the 07/29/2016 settlement date. Looking at total shares short, there was a 1,676,634 share increase to 7,115,092, an increase of 30.83% since 07/29/2016. The following chart plots the historical days to cover for FLS 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 Tuesday, HST was down about 1.4% on the day, COL was down about 0.7%, DLR was down about 2.3%, HP was off about 4.1%, and FLS was off about 2.3%.