August is often a period of summer doldrums in the stock markets. Yet this year, those investors, traders, analysts and others who didn’t go away on holiday saw the markets reclaiming all-time highs (in a record bull run), after an earnings season that was stronger than many expected, as well as an economy that is strong despite growing trade wars and rising interest rates and inflation.
Judging by the most shorted stocks traded on the New York Stock Exchange between the August 15 and August 31 settlement dates, those sellers were cautious, as short interest moves were most downward and mild. The biggest decliners at the top of the list included king of the mountain Rite Aid and also Bank of America. Bucking the trend were J.C. Penney and Snap.
Note that the five most shorted NYSE stocks still had more than 110 million shares short at the end of the most recent settlement period. In fact, nine of the top 10 had short interest of more than 100 million shares.
Rite Aid
The reported number of Rite Aid Corp. (NYSE: RAD) shares sold short dropped from more than 185.16 million to 162.71 million or so between the most recent settlement dates, yet this specialty retailer stayed atop the list. That was 15.4% of the company’s total float, and the prior reading was the highest level of short interest so far this year. The average daily trading volume plunged during the period, and the days to cover figure jumped from about seven to 15.
Last month, Rite Aid and Albertsons threw in the towel on their merger. The share price rose more than 10% but gave up most of that gain by the latest settlement date, and the shares slipped further afterward. In the past week, the stock dropped 7% but recovered, and it closed most recently at $1.33 a share. That was around 22% lower since than 90 days ago. Rite Aid shares have traded between $1.23 and $2.80 apiece in the past 52 weeks.
J.C. Penney
The number of J.C. Penney Co. Inc. (NYSE: JCP) shares short increased by more than 3% in the latest period to more than 135.57 million. Short interest has increased in six of the past eight periods, and it was a whopping 44.2% of the struggling retailer’s float most recently. The daily average trading volume increased sharply during the two-week period, so the days to cover fell from about 10 to six.
Some are wondering whether J.C. Penney or Sears will become a penny stock first. The former’s share price tumbled more than 26% after its earnings report early in the period and never recovered. The stock saw a more than 4% bump this week and closed most recently at $1.83 a share. That is more than 39% lower over the past three months. The 52-week low, seen last month, was $1.60, while the 52-week high of $4.75 was reached early this year.
Chesapeake Energy
The number of Chesapeake Energy Corp.’s (NYSE: CHK) shares short decreased about 4% in the most recent period, and this oil and gas company stayed at number three on the list. The reported short interest of more than 134.61 million shares was 15.0% of the total float, and it was the ninth time since mid-February that the total was less than 200 million. At the posted daily average trading volume on the settlement date, it would take about seven days to cover all the short positions.
Chesapeake’s solid second-quarter results came with lowered guidance for the fiscal year. Short sellers watched its share price gain more than 8% but give almost all of it back during those two weeks. The stock is trading about where it was a week ago, and it ended Wednesday at $4.06 a share. That is more than 15% lower in the past 90 days. Shares have changed hands as high as $5.60 and as low as $2.53 in the past year.
Bank of America
Bank of America Corp.’s (NYSE: BAC) short interest in the latest two-week period tumbled more than 13% to over 125.50 million shares, allowing it to slip a couple of spots down the list. The prior reading was the greatest number of shares short since January, and the latest one represented just 1.3% of the total float. As of the end of last month, it would take about three days to cover all short positions, after the daily average volume shrank to a year-to-date low.
Bank of America remains one of Warren Buffett’s big five stakes. Its share price ended the latest settlement period with an increase of less than 2%. The S&P 500 was up less than 3% between the settlement dates. The stock closed most recently at $30.43 a share, which is marginally higher than 90 days ago. The shares have changed hands between $23.87 and $33.05 in the past year.
Snap
Rising into the top six on the most shorted list, Snap Inc. (NYSE: SNAP) saw the number of its shares short pop more than 5% in the latter half of August. The more than 118.33 million shares reported most recently represented 23.2% of the social media and camera company’s total float. At the daily average trading volume at the end of last month, it would take about seven days for investors to cover all short positions.
Excitement over Snap’s latest quarterly results was short-lived. The stock ended the short interest period more than 11% lower, and it has continued to retreat since then. Snap’s share price was last seen at $9.20, the same day it sank to a new 52-week low of $8.90. The 52-week high, seen early this year, was $22.22 a share. The stock now is down more than 31% in the past 90 days.
Ford
Ford Motor Co. (NYSE: F) also jumped back into the top six even though the number of its shares short in the latter weeks of the month slipped a bit to 108.95 million or so, which was 2.8% of the iconic automaker’s float. At the average daily volume on the latest settlement date, it would take about three days for sellers to cover all their short positions.
Ford’s efforts to restructure itself into a turnaround continue. The share price ended the latest settlement period fractionally lower, after having been up more than 5% at one point. The stock pulled back further afterward, and the shares closed most recently at $9.34, which is down almost 23% in the past three months. The shares have changed hands between $9.22 and $13.48 apiece in the past 52 weeks.
24/7 Wall St.And the Rest
Rounding out the top 10 were Weatherford International PLC (NYSE: WFT), Sprint Corp. (NYSE: S), Alibaba Group Holding Ltd. (NYSE: BABA) and General Electric Co. (NYSE: GE). The big mover here was GE, which nearly fell out of the top 10 with an almost 19% decline in the number of its shares short. Sprint also saw a notable decline.
Lingering outside the spotlight of the top 10 most shorted NYSE stocks were CenturyLink Inc. (NYSE: CTL) and Coty Inc. (NYSE: COTY). Note that AT&T Inc. (NYSE: T) continued its fall well out of the top 10 with another decline in its short interest late last month.
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