Key Changes in Financial Stock Short Interest

It is interesting to see that the short interest did not rise universally when you consider the market changes seen in the past 10 days. Many strategists were calling for a drop, yet short sellers only listened on some names.

American International Group Inc. (NYSE: AIG) saw a gain in its short interest to 14.71 million in mid-January, versus 13.642 million shares short at the end of December. While this was a second gain in a row, AIG’s short interest remains only about half of what it was at the start of last summer.

Bank of America Corp. (NYSE: BAC) saw its short interest fall by more than 10%, down to 100.33 million shares from 113.17 million shares. It managed to grow book value again with earnings, and it still trades at a discount to its nominal book value. Its shares are also down only about 6% from its 52-week high. This was Bank of America’s third consecutive drop in the short interest, and it is a 52-week low.

Citigroup Inc. (NYSE: C) saw its short interest rise to 39.55 million shares, or up more than 10%, from the 35.09 million shares short at the end of December. Citigroup remains the most obscure of the challenged money-center banks. This also has the lowest discount to its book value as well, and shares are down close to 15% from their 52-week high. This was the highest short interest reading for Citigroup shares since last summer.

Goldman Sachs Group Inc. (NYSE: GS) had only a marginal drop, down to 7.515 million shares short from a prior short interest of 7.593 million shares. The newest Dow Jones Industrial Average component among banks and brokers is down roughly 10% from its 52-week high already. While this is a nominal change, the short interest in Lloyd Blankfein and company remains elevated, if compared to last summer.

J.P. Morgan Chase & Co. (NYSE: JPM) saw a massive drop in its short interest, falling almost 18% to 38.61 million shares in mid-January. Jamie Dimon seems to be out of the hot seat, and it appears as though the largest part of the government settlements over mortgages has been seen. This was the lowest short interest going back to last August.

Morgan Stanley (NYSE: MS) was up marginally in short interest, to 25.514 million shares in mid-January from 24.985 million shares at the end of December. Trading at $29.97 now, Morgan Stanley shares are down more than 10% from their 52-week high of $33.52. There seems to be no directional data worth noting on Morgan Stanley’s short interest, as this was in the middle of the recent range measured.

Wells Fargo & Co. (NYSE: WFC) also saw only a marginal change, down to 38.64 million shares in mid-January from 38.865 million at the end of December. It seems that no one wants to really bet against the shares frequently bought by Warren Buffett.