Five S&P 500 Stocks With Rising Short Activity

The most recent short interest data has just been released by the NASDAQ for the 11/14/2014 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 10/15/2014 reporting period, then the most recent 11/14/2014 reporting period, followed by the change and percentage change:

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At McCormick & Co ., Inc. (NYSE: MKC), average daily volume at the 11/14/2014 settlement saw a decrease to 547,698, as compared to 1,099,858 at the 10/15/2014 report. That brought days to cover up to 13.43, a 137.65% increase from the 5.65 days to cover calculated at the 10/15/2014 settlement date. Looking at total shares short, there was a 1,139,665 share increase to 7,353,528, a rise of 18.34% since 10/15/2014. The below chart shows the historical days to cover for MKC at previous short interest release dates:

Meanwhile at AT&T Inc (NYSE: T), average daily volume at the 11/14/2014 settlement moved lower to 18,149,536, as compared to 26,232,035 at the 10/15/2014 report. That brought days to cover up to 13.69, a 59.05% increase from the 8.60 days to cover calculated at the 10/15/2014 settlement date. Looking at total shares short, there was a 22,669,699 share increase to 248,388,468, an increase of 10.04% since 10/15/2014. The chart below shows the historical days to cover for T at previous short interest release dates:

Over at Altera Corp. (NASD: ALTR), average daily volume at the 11/14/2014 settlement decreased to 1,907,381, as compared to 4,844,031 at the 10/15/2014 report. The resulting days to cover value was up to 6.91, a 251.35% increase from the 1.97 days to cover calculated at the 10/15/2014 settlement date. Looking at the running total of all outstanding shorted shares, there was a 3,651,827 share increase to 13,174,433, a 38.35% increase since 10/15/2014. The below chart plots the historical days to cover for ALTR at prior short interest release dates over time:

At Marriott International , Inc. (NASD: MAR), average daily volume at the 11/14/2014 settlement declined to 2,018,201, as compared to 4,506,399 at the 10/15/2014 report. The days to cover calculation moved up to 8.15, a 145.29% increase from the 3.32 days to cover calculated at the 10/15/2014 settlement date. Looking at the total of all open short positions, there was a 1,476,399 share increase to 16,457,145, a 9.86% rise since 10/15/2014. The chart below shows the days to cover over time for MAR at previous short interest release dates:

And at Gannett Co Inc (NYSE: GCI), average daily volume at the 11/14/2014 settlement decreased to 1,266,934, as compared to 2,587,001 at the 10/15/2014 report. That brought days to cover up to 9.01, a 109.59% increase from the 4.30 days to cover calculated at the 10/15/2014 settlement date. Looking at total shares short, there was a 293,883 share increase to 11,412,646, an increase of 2.64% since 10/15/2014. The following chart plots the historical days to cover for GCI 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 Wednesday, MKC was up about 0.2% on the day, T was up about 0.9%, ALTR was up about 2.3%, MAR was up about 0.5%, and GCI was up about 1.2%.