The beginning of October not only ushered in the fourth quarter, but a time of the year when the markets can be volatile. The bull run approached nine years long, and yet the markets continued to push new highs. A look at the most shorted stocks traded on the New York Stock Exchange suggests that short sellers might have had their minds on the coming holiday shopping season. Two struggling retailers saw sizable growth in their short interest between the September 29 and October 13 settlement dates.
In particular, short sellers continued to pile on flailing retailers J.C. Penney and Rite Aid, both of which saw their shares sinking to new lows in the first weeks of this month. On the other hand, AT&T and Chesapeake Energy saw the only notable decline in the numbers of their shares sold short among the top six in this period.
Note that the top six stocks on the list all had more than 125 million shares short at the end of the most recent settlement period. In fact, all the top 10 had short interest of more than 100 million shares.
AT&T
AT&T Inc. (NYSE: T) once again tops the list, with more than 189.43 million shares short on the most recent settlement date. That was a little more than 1% lower than two weeks earlier, a pause after modest gains in the previous two periods. The latest reading represented 3.1% of the float, and it was a retreat from the highest level of short interest in at least a year. As of mid-month, it still would take around seven days to cover all short positions.
AT&T said that recent natural disasters have hurt its bottom line. In the first two weeks of October, short sellers watched the share price fall almost 9%, most of that pull back in the final two days of the period. The stock hit a new 52-week low of $34.81 per share on Tuesday. The shares are almost 13% lower than six months ago. AT&T shares reached a 52-week high of $43.03 per share at the beginning of the year.
Rite Aid
A more than 31% pop brought the reported number of Rite Aid Corp. (NYSE: RAD) shares short to more than 183.96 million on the most recent settlement date. That was good enough to lift it to the number two spot on the list. The latest reading was again easily the greatest level of short interest in the past year, as well as being 17.6% of the retailer’s total float. The average daily trading volume dwindled in the most recent period, and the days to cover rose from three to six.
A report of weak sales had this stock hitting new 52-week lows in the period. Its shares ended the first two weeks of this month more than 11% lower, despite being up around 5% early in the period. The stock closed most recently at $1.79 a share, which was around 52% lower than it was six months ago. Rite Aid shares have changed hands between $1.63 and $8.77 in the past year.
Chesapeake Energy
Though the number of Chesapeake Energy Corp.’s (NYSE: CHK) shares short has risen in most periods so far this year, in the latest period it saw a short interest decline of around 7% to more than 179.37 million. That still represented 20.0% of the company’s float. At the posted daily average trading volume on the settlement date, it would take about nine days to cover all the short positions.
Barron’s recommended selling Chesapeake shares earlier this month. Its share price ended the two weeks almost 10% lower, and it has retreated further since then. The S&P 500 saw a more than 1% gain between the settlement dates. The stock closed Tuesday’s trading at $3.65 a share, not far from the 52-week low of $3.55. Now it is around 48% lower year to date, and shares have changed hands as high as $8.20 in the past 52 weeks.
J.C. Penney
The number of J.C. Penney Co. Inc. (NYSE: JCP) shares short grew from over 137.89 million in the previous period to more than 152.10 million. The new reading was the greatest so far this year, and it is the 14th in a row above 100 million, as well as a whopping 52.5% of the struggling retailer’s float. The daily average trading volume increased during the period, and the days to cover dropped to about 10.
J.C. Penney was also a member of the 52-week low club in the first two weeks of this month. Its share price retreated more than 10% during the short interest period. However, it has jumped 7% in the past week, and the stock closed most recently at $3.66 a share. That still is down almost 35% from six months ago. The 52-week low, seen earlier this month, was $3.31, while the 52-week high of $10.74 was reached last December.
Alibaba
Alibaba Group Holding Ltd. (NYSE: BABA) saw the number of its shares short barely pull back from the previous period, which had the second highest level of short interest in at least a year. And note that the approximately 133.93 million shares reported at the middle of this month totaled 5.3% of the Chinese e-commerce giant’s float. The daily average volume decreased during the most recent period, and the days to cover rose from seven to 11.
Alibaba remains a mega cap favorite of at least one analyst. The share price rose more than 3% in the first two weeks of October. However, the stock pulled pack afterward and closed Tuesday at $173.70 a share. That is more than 51% higher than six months ago. The 52-week low of $86.01 was seen last December, and the 52-week high of $184.70 two weeks ago.
Weatherford
Weatherford International PLC (NYSE: WFT) returned to the top six on the list even as the number of shares short increased only a little more than 3% in the first two weeks of October. That was the second lowest level of short interest since last February. The more than 126.79 million shares reported most recently represented 13.0% of the total float. The days to cover reading ended the period at around nine.
Weatherford was one of the companies laying off the most workers this year. Short sellers watched the share price retreat about 15% between the latest settlement dates. In those two weeks, the Dow Jones Industrial Average saw a gain of about 2%. The stock was last seen trading at $3.31 a share, after sinking to a 52-week low of $3.16 earlier on Tuesday. The 52-week high, from last March, was $7.09.
And the Rest
Rounding out the top 10 were CenturyLink Inc. (NYSE: CTL), Snap Inc. (NYSE: SNAP), General Electric Co. (NYSE: GE) and Bank of America Corp. (NYSE: BAC). The big gainer here was Snap, with a double-digit percentage rise in the number of its shares short. Meanwhile, short interest in Bank of America and GE shrank somewhat during those two weeks.
And lingering beyond the spotlight of the top 10 were Ford Motor Co. (NYSE: F), Sprint Corp. (NYSE: S) and Vale S.A. (NYSE: VALE). And note that Pfizer Inc. (NYSE: PFE) and Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) each saw a surge in short interest, but neither is yet close to a spot in the top 10 most shorted NYSE stocks.
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