Health and Healthcare

Are Short Sellers Doubting Trump by Hiking Bets in Major Pharma?

Chris Lange

Published: February 10, 2017 8:35 am

Last Updated: January 12, 2020 2:58 pm

Pharmaceutical companies usually are involved in a lengthy process in getting their drug candidates to market through clinical trials. There is a fair amount of risk involved, should a study come back negative or a candidate not be approved. Conversely, if a drug gains FDA approval or passes a clinical trial, there can be big upside.

The Trump administration has promised reforms in the health care sector, such as changing the bidding process for drugs and shortening the FDA approval process. It has yet to be seen how much headway Trump can actually make with these reforms, but so far the reaction has been quite positive.

Keep in mind that short sellers betting against big pharma are taking on an added risk. They have to pay out the ongoing high dividends on top of the cost of borrowing the shares.

The January 31 short interest data have been compared with the previous figures, and short interest moves in these selected pharmaceutical stocks mostly increased.

Short interest in Pfizer Inc. (NYSE: PFE) decreased to 34.30 million shares from the previous 37.93 million. Its shares were last seen at $32.38, within a 52-week trading range of $28.74 to $37.39.

The number of Merck & Co. Inc. (NYSE: MRK) shares short increased to 18.36 million from 15.95 million in the previous period. Its shares were trading at $64.39, in a 52-week range of $48.28 to $65.46.

Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest increased to 20.99 million shares, compared to the previous level of 19.98 million. Shares were trading at $32.25, in a 52-week range of $31.90 to $59.35.

The short interest rise in Bristol-Myers Squibb Co. (NYSE: BMY) was to 13.45 million shares, compared to the previous reading of 12.18 million. Shares were trading at $51.51, within a 52-week range of $46.01 to $77.12.

The number of shares short in AbbVie Inc. (NYSE: ABBV) decreased to 30.98 million, compared to the previous 33.44 million. The stock was trading at $60.84, in a 52-week range of $51.60 to $68.12.

Eli Lilly and Co.’s (NYSE: LLY) short interest increased slightly to 10.82 million shares from the previous 10.72 million. The stock was trading at $77.70. The 52-week range is $64.18 to $83.79.