The new year got off to a strong start, despite the bull market being well more than eight years old, due in part to optimism in the wake of the new tax law. So how were short sellers positioning themselves ahead of the coming earnings reporting season? Judging by the most shorted stocks traded on the New York Stock Exchange between the December 29 and January 12 settlement dates, they were mostly focused on one or two favorites.
General Electric was lifted back into the top six with a more than 25% rise in the number of its shares short between the settlement dates. Sprint also saw a double-digit percentage gain, bringing it back into the top ten. Otherwise, the swings in short interest among these NYSE stocks were mixed and modest.
Note that the six most shorted NYSE stocks all had more than 140 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, after a more than a 4% gain to more than 193.84 million shares short by the most recent settlement date. That ended a run of declines in the previous four periods, down from a 52-week high over 230 million. The latest reading represented 3.2% of the company’s float. As of the middle of this month, it would take around six days to cover all short positions, due to a rise in the average daily trading volume.
AT&T announced in the period that it is preparing to roll out super-fast 5G. In the first two weeks of January, investors watched the share price fall more than 5%, though it was down more than 6% at one point. The stock has continued to recover since then and ended Wednesday’s trading at $37.02 a share, which is up about 2% from six months ago. AT&T shares have traded hands between $32.55 and $42.70 in the past 52 weeks.
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Rite Aid
The reported number of Rite Aid Corp. (NYSE: RAD) shares sold short retreated from more than 161.69 million to 157.37 million as of the most recent settlement date. That followed declines in the previous three periods, but it was the 12th straight period with more than 100 million shares short. The latest figure still was 14.9% of the retailer’s total float. The average daily trading volume doubled in the most recent period, and the days to cover dropped from about eight to four.
Rite Aid offered up a disappointing earnings report earlier this month. Yet its shares ended the first two weeks of the year more about 19% higher, most of that gain coming in the last couple of days of the period. The stock closed most recently at $2.22 a share, which was more than 4% higher since the beginning of the year. Rite Aid shares have traded between $1.38 and $7.23 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 nearly 5% to almost 150.42 million. That represented 16.8% of the oil and gas company’s float. At the posted daily average trading volume on the settlement date, it would take about four days to cover all the short positions.
A record storage withdrawal boosted natural gas prices in the short interest period. While its share price ended the two weeks almost 6% higher, Chesapeake has retreated handily since then. The S&P 500 saw a more than 4% increase between the settlement dates. The stock closed Wednesday’s trading at $4.08 a share, which is barely any higher year to date. 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.
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Weatherford
Weatherford International PLC (NYSE: WFT) also saw modest shrinkage in the number of its shares short in the first two weeks of January. That followed a pause in the previous period after more than 12% drop before that from the highest level of short interest last year. The more than 145.69 million shares reported most recently represented 14.9% of the total float. The days to cover reading ended the period at around five as the average daily volume increased sharply.
At least one analyst downgraded Weatherford after the start of the year. Short sellers watched the share price climb more than 17% in the two-week period, though it pulled back a bit afterward. The stock was last seen trading at $4.27 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 increased less than 3% to over 145.09 million shares. That reclaimed some of the 7% drop in the prior period, and it represents 1.5% of the total float. It was also the ninth consecutive period in which the number of shares short was more than 100 million. It would take at least two days to cover all short positions, as of the middle of this month.
This money center bank was among the companies receiving lots of Wall Street love as the new year got underway. Its share price ended the latest settlement period with a gain of almost 5%, despite being fractionally down early in the period. The stock closed most recently at $32.09 a share. That is more than 7% higher year to date. The shares have changed hands between $22.07 and this week’s $32.21 in the past year.
General Electric
General Electric Co. (NYSE: GE) has risen back into the top six on the list with a more than 28 million surge in the number of its shares short in the first two weeks of this month. That ended three straight periods of falling short interest. The more than 141.50 million shares reported most recently represented 1.5% of the total float. The days to cover reading ended the period at around two.
GE was one of the worst-performing Dow stocks of 2017. Its shares rose nearly 5% but then gave up most of that gain between the settlement dates. In that time, the Dow Jones Industrial Average rose almost 5%. GE’s share price was last seen at $16.44, not far from the recent 52-week low of $15.80, and more than 9% lower year to date. The 52-week high, seen last February, was $32.59 a share.
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And the Rest
Rounding out the top 10 were J.C. Penney Co. Inc. (NYSE: JCP), Alibaba Group Holding Ltd. (NYSE: BABA), Ford Motor Co. (NYSE: F) and Sprint Corp. (NYSE: S). As mentioned, Sprint also saw a sizable upswing in the number of its shares short. Among these four, J.C. Penney was the only one in which the short interest shrank in the first two weeks of the year.
Snap Inc. (NYSE: SNAP) dropped out of the top 10 in the latest period. Others lingering outside the spotlight of the top 10 most shorted NYSE stocks included Infosys Ltd. (NYSE: INFY), Transocean Ltd. (NYSE: RIG) and Vale S.A. (NYSE: VALE).
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