Health and Healthcare

Major Pharma Short Sellers Grow More Selective

Chris Lange

Published: October 12, 2016 7:35 am

Last Updated: January 13, 2020 2:31 am

The short interest data have been released for the September 30 settlement date. 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 is approved or passes a clinical trial, there can be big upside.

Drug prices may be under pressure due to the campaign rhetoric, but if generic drugs are going to keep increasing the market share of existing drugs, then there would seem to be a reason for owning major pharmaceuticals.

The September 30 short interest data have been compared with the previous figures, and for the selected pharmaceutical stocks, short interest was mixed.

Note that during this time a few of the companies hit new 52-week lows.

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.

Pfizer Inc. (NYSE: PFE) saw its short interest increase to 43.56 million shares from the previous 42.43 million. Shares of Pfizer closed Tuesday at $33.13, within a 52-week trading range of $28.25 to $37.39.

Merck & Co. Inc. (NYSE: MRK) saw a decrease in the number of its shares short to 27.76 million, from 30.49 million in the previous period. Its shares closed Tuesday at $61.93, in a 52-week range of $47.97 to $64.86.

Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) short interest increased slightly to 11.02 million shares. The previous level was 10.81 million. Shares closed Tuesday at $44.45, in a 52-week range of $44.23 to $66.55.

Bristol-Myers Squibb Co. (NYSE: BMY) saw its short interest increase slightly to 14.08 million shares from the previous reading of 13.96 million. Shares closed Tuesday at $49.55, within a 52-week range of $49.50 to $77.12.

AbbVie Inc. (NYSE: ABBV) short interest fell to 35.31 million shares, compared to the previous 37.79 million. Shares of AbbVie closed Tuesday at $62.39, in a 52-week trading range of $45.45 to $68.12.