With the holiday shopping season looking strong and tax reform coming to pass as last year wound to a close, how were short sellers positioning themselves for the coming year? Judging by the most shorted stocks traded on the New York Stock Exchange between the December 15 and December 29 short interest settlement dates, they were mostly ready to lighten up on those stocks.  The number of shares short in most of these stocks shrank.

After two periods in a row of rising short interest in Bank of America, short sellers backed off the stock such that it led the downward trend. On the other hand, the number of Weatherford shares short saw a minimal rise in the number of its shares short.

Note that the six most shorted NYSE stocks all had more than 130 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, despite more than an 8% drop to more than 185.09 million shares short on the most recent settlement date. That was the fourth consecutive decline, down from a 52-week high over 230 million. The latest reading represented 3.0% of the company’s float. As of the end of last month, it would take around eight days to cover all short positions, due to a decline in the average daily trading volume.

AT&T is preparing to roll out super-fast 5G. In the latter two weeks of December, investors watched the share price fall about 2% but then end the period fractionally higher. The stock has retreated again since the beginning of the year and ended Wednesday’s trading at $36.62 a share, which is in the same ballpark as it was six months ago. AT&T shares have traded hands between $32.55 and $42.70 in the past 52 weeks.

Rite Aid

The reported number of Rite Aid Corp. (NYSE: RAD) shares sold short barely retreated to more than 161.69 million as of the most recent settlement date. That followed declines in the previous two periods, but it was the 11th straight period with more than 100 million shares short. The latest figure still was 15.4% of the retailer’s total float. The average daily trading volume decreased again in the most recent period, but the days to cover remained about eight.

The short interest period ended before Rite Aid’s recent disappointing earnings report. Its shares ended the final two weeks of the year more about 5% higher, though it was up around 10% earlier in the period. The stock closed most recently at $2.13 a share, which was more than 8% lower than it was six months ago. Rite Aid shares have traded between $1.38 and $8.77 a piece in the past year.

Chesapeake Energy

The number of Chesapeake Energy Corp.’s (NYSE: CHK) shares short has risen in most periods in the past year, but in the latest period it saw a decline of more than 4% to more than 158.18 million. That represented 17.7% of the oil and gas company’s float. At the posted daily average trading volume on the settlement date, it would take about seven days to cover all the short positions.

Bitter cold sent natural gas prices sharply higher as the year wound down. While its share price ended the two weeks about 12% higher, Chesapeake has retreated somewhat since then. The S&P 500 saw a fractional decline between the settlement dates. The stock closed Wednesday’s trading at $4.00 a share, which is about 14% lower than six months ago. The 52-week low of $3.41 was seen back in October. Shares have changed hands as high as $7.29 in the past year.

Weatherford

Weatherford International PLC (NYSE: WFT) technically bucked the trend as the number of its shares short rose fractionally in the latter two weeks of December. That followed a more than 12% drop in the prior period from the highest level of short interest so far this year. The approximately 149.09 million shares reported most recently represented 15.2% of the total float. The days to cover reading ended the period at around nine as the average daily volume declined again.

At least one analyst recently anticipated that the Weatherford share price could almost double. Short sellers watched the share price jump more than 23% in the two-week period, and it has continued to climb since that time. Between the settlement dates, the Dow Jones Industrial Average was essentially flat. The stock was last seen trading at $4.09 a share, up from a 52-week low of $3.08 in late November. The 52-week high, from last March, was $7.09.

Bank of America

Bank of America Corp.’s (NYSE: BAC) short interest in the latest two-week period pulled back more than 7% to over 140.15 million shares. That followed two double-digit percentage gains in a row, and it represents 1.4% of the total float. It was also the eighth consecutive period in which the number of shares short was more than 100 million. It would take at least three days to cover all short positions, as of the end of December.

This money center bank is expected to buy back many of its shares this year. Its share price ended the latest settlement period with a minimal gain, despite being up almost 2% at one point in the period. The stock closed most recently at $30.54 a share. That is more than 22% higher than six months ago. The shares have changed hands between $ 22.01 and this week’s $30.73 in the past year.

J.C. Penney

The number of J.C. Penney Co. Inc. (NYSE: JCP) shares short shrank from over 136.52 million in the previous period to more than 132.42 million. That was the lowest short interest since August, as well as a whopping 45.6% of the struggling retailer’s float. Note too that short interest has been above 100 million for 19 periods in a row. The daily average trading volume also shrank during the period, so the days to cover increased from about nine or over 10.

J.C. Penney continues to search for the elusive turnaround. Its share price rose more than 16% but gave up much of that gain during the short interest period. It continued to retreat afterward and closed most recently at $3.97 a share. That is down more than 11% from six months ago. The 52-week low, seen back in November, was $2.35, while the 52-week high of $7.42 was reached early last year.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

And the Rest

Rounding out the top 10 were Alibaba Group Holding Ltd. (NYSE: BABA), General Electric Co. (NYSE: GE), Ford Motor Co. (NYSE: F) and Snap Inc. (NYSE: SNAP).  Among these, Alibaba was the standout, with a gain in its short interest. Ford led the decliners with nearly a 10% decline in the number of its shares sold short.

Short sellers backed off of Sprint Corp. (NYSE: S) too, so it remains outside the spotlight of the top 10 most shorted NYSE stocks. Not far away are Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) and Transocean Ltd. (NYSE: RIG).

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.