Investing

2 Short Seller Favorites Retreating From Recent Highs

Trey Thoelcke

Published: February 7, 2017 7:05 am

Last Updated: January 12, 2020 3:06 pm

The Dow Jones Industrial Average appears to be struggling to find any traction above the 20,000 milestone. Short sellers, though, may be keeping an eye on two of their favorite stocks in the days ahead. That’s because Bank of America Corp. (NYSE: BAC) and Intel Corp. (NASDAQ: INTC), which are among the five most shorted stocks traded on the Nasdaq and the New York Stock Exchange, recently hit new 52-week highs and have begun to retreat.

After a nearly 22% reduction in Bank of America’s number of shares short in the previous period brought it to the lowest level since September, there was hardly any change between the December 30 and January 13 settlement dates. The more than 107.40 million shares short reported most recently still represented 1.1% of the money center bank’s float. The average daily trading volume increased in the period, but the days to cover remained at less than one.

This bank posted better-than-expected earnings last month. Short sellers watched the shares rise around 4% in the short interest period, while the S&P 500 increased less than 2% in that time. But the shares have slipped more than 1% since hitting a new 52-week high of $23.55 more than a week ago. The most recent close was at $23.12, the 52-week low is $10.99 and the consensus price target is $24.79.

Almost 76.05 million Intel Corp. (NASDAQ: INTC) shares were sold short as of the most recent settlement date. Short interest shrank more than 4% during the period to total 1.6% of the company’s float. Note that the number of shares short has topped 80 million only once since last May. As of the mid-January, it would take about four days to cover all short positions.

Intel is expected to help lift the Dow this year, though its share price ended the two weeks up less than 2% from on the previous settlement date. However, since hitting a 52-week high of $38.45 in late January, the shares are down more than 4%, to close most recently at $36.27. Shares have changed hands as low as $27.68 in the past 52 weeks. The consensus analyst target is $41.15.

Note that Sirius XM Holdings Inc. (NASDAQ: SIRI), another highly shorted stock, is also trading near its 52-week high, and new short interest data is due later this week.