Investing

2 Short Seller Favorites Hit New Highs Ahead of US Inauguration

Trey Thoelcke

Published: January 20, 2017 7:35 am

Last Updated: January 12, 2020 3:42 pm

While the inauguration of Donald Trump as the next U.S. president will take up much of the attention today, short sellers also may be keeping an eye on two of their favorite stocks in the days ahead. That’s because Sprint Corp. (NYSE: S) and Vale S.A. (NYSE: VALE), both among the five most shorted stocks traded on the New York Stock Exchange, have hit new 52-week highs in the lead up to the big event in Washington.

Sprint’s short interest decline in the previous three periods continued into last month. Its shares short retreated another almost 7% between the December 15 and December 30 settlement dates. The more than 132.42 million shares reported totaled 20.8% of the float. At the most current daily average, it would take about 11 days to cover all the short positions.

Sprint said in the period that it would add 5,000 jobs. The telecom’s share price ended the two weeks almost 8% higher than where it began it, though it was up more than 13% at one point. The shares rose more than 7% in the past week to hit a new 52-week high of $9.10 early on Thursday. The 52-week low is way down at $2.44, and even the consensus price target is just $7.28, suggesting that analysts may consider it overvalued.

The number of Vale shares short grew by more than 4.7 million in the most recent period, or almost 5%, to more than 104.36 million. That ended three consecutive periods of shrinking short interest. At the most recent average daily volume, it would take about five days to cover all short positions.

Analysts reacted positively to the recent sale of fertilizer assets to Mosaic. Short sellers watched the share price of this Brazilian miner decrease more than 8% but recover some during the short-interest period. The stock’s new 52-week high of $10.12 was hit this past Wednesday. Even after pulling back a bit, it is still up more than 4% in the past week. The 52-week low is $2.13, and here too the most recent close, at $9.80, is higher than the consensus analyst target, which is $8.69.