It takes a certain kind of courage to short sell blue chips, such as the Dow Jones industrial average components. Short sellers are betting on these companies to fail, or at least for their share prices to fall handily. Plus, those sellers are responsible for paying the dividends on the stocks they short.
Maybe it is little surprise that only two of the 30 Dow stocks had sizable short interest between November 15 and November 29; that is, more than 60 million shares short. In fact, just six of them had short interest of more than 35 million shares.
While the bull market is quite long in the tooth — now well more than 10 years old — and some concern about a possible recession remains as the trade war with China shambles on, the markets are again trading near all-time highs. Investors may wonder then what the short sellers expect from some of the biggest, most well-respected names on Wall Street as the year winds down.
As of the end of November settlement date, the most recently reported period, short sellers favored tech giants Apple Inc. (NASDAQ: AAPL), Microsoft Corp. (NASDAQ: MSFT) and Intel Corp. (NASDAQ: INTC) above all other Dow stocks.
Apple
> Shares short: nearly 63.49 million
> Change from prior period: 38.0%
> Percentage of float: 1.4
This surge to the highest level since last March lifted Apple to the top of the list of most shorted Dow stocks from fourth place. The most recent days to cover figure is less than two. Note that the latest number of shares short is nowhere near the 97 million year-to-date high seen last February.
Apple’s spectacular run this year has helped lift the Dow and the markets in general. Yet, its shares ended the final two weeks of last month only about 1% higher than where they started, and it had been down more than 1% earlier in the period. The Nasdaq was up less than 2% in that time.
Shares closed most recently at $268.48 apiece, which is up more than 1% in the past week. Apple’s 52-week low of $142.00 was seen in last January, and the 52-week high of $271.00 was reached this past week. The stock now trades about 70% lower than at the beginning of the year.
Microsoft
> Shares short: almost 61.13 million
> Change from prior period: −2.5%
> Percentage of float: 0.8
Microsoft’s short interest had grown in the previous six periods to a year-to-date high, but the tech giant slipped from the top spot on this list as last month wound down. The days to cover figure remained about three, even though the average daily volume increased somewhat.
Microsoft still casts a long shadow over the tech world, even against the up and coming unicorns. Like the Nasdaq, its share price ended those two weeks less than 2% higher, though the shares had been down slightly at one point in the period. They pulled back after the settlement date as well.
After ending the past week about 1% higher, Microsoft stock closed trading most recently at $151.13 a share. That was in a 52-week range of $93.96 (seen almost a year ago) to $152.50 (just before Thanksgiving). The most recent share price is more than 49% higher than at the beginning of the year, compared to a less than 20% gain for the Dow.
Intel
> Shares short: more than 58.78 million
> Change from prior period: 3.4%
> Percentage of float: 1.4
Intel short interest continues to rebound from a year-to-date low in September but is still well below the year-to-date high of more than 63 million shares back in July. At the average daily trading volume on the latest settlement date, it would take these investors more than three days to cover their short bets.
Intel admitted to ongoing supply constraints during the short interest period. Short sellers watched the shares rise almost 2% but give up most of that gain by the end of the two weeks. The stock dropped more sharply at the beginning of this month, as it completed the divestiture of its smartphone modem business.
Intel was last seen trading at $56.59 a share, not far from the multiyear high of $59.59 seen this past spring and well above the 52-week low of $42.86. The latest share price is more than 20% higher than at the beginning of the year, but the Nasdaq is up over 29% year to date and the Dow has seen that gain of almost 20%.
And the Rest
Rounding out the top six most shorted Dow stocks on the most recent settlement date were Pfizer Inc. (NYSE: PFE), Exxon Mobil Corp. (NYSE: XOM) and Verizon Communications Inc. (NYSE: VZ). Of these, only Exxon saw a drop in the number of its shares short during the latter two weeks of November, as it strives to become a different kind of company. Pfizer shares short rose by a double-digit percentage during the period, yet it offers little help in lifting the Dow. Verizon’s short interest rose more modestly during those two weeks.
Also notice on the following list of short interest changes in Dow stocks as of November 29 the double-digit rise at health care giants Merck & Co. Inc. (NYSE: MRK) (which raised its dividend in the period) and UnitedHealth Group Inc. (NYSE: UNH) (which teamed up with Walgreens).
| Dow Stock | Short (millions) | Change | % Float |
|---|---|---|---|
| Apple | 63.49 | 37.97% | 1.43% |
| Microsoft | 61.13 | −2.52% | 0.81% |
| Intel | 58.78 | 3.36% | 1.35% |
| Pfizer | 57.98 | 12.24% | 1.05% |
| Exxon | 39.26 | −6.68% | 0.93% |
| Verizon | 35.33 | 7.98% | 0.85% |
| Cisco | 34.63 | −8.39% | 0.82% |
| Coca-Cola | 32.67 | 8.09% | 0.77% |
| JPMorgan | 29.80 | 4.24% | 0.96% |
| Visa | 28.79 | −7.11% | 1.68% |
| Merck | 24.67 | 13.18% | 0.97% |
| Procter & Gamble | 22.32 | 2.21% | 0.90% |
| Chevron | 20.13 | −11.03% | 1.06% |
| Walgreens | 19.32 | −5.08% | 2.60% |
| Disney | 18.85 | −8.39% | 1.05% |
| Johnson & Johnson | 17.21 | 4.61% | 0.65% |
| Walmart | 16.39 | 0.05% | 1.17% |
| IBM | 13.89 | 0.21% | 1.57% |
| Dow | 11.98 | −1.92% | 1.62% |
| UnitedHealth | 10.60 | 20.55% | 1.13% |
| 3M | 10.24 | 6.92% | 1.78% |
| Caterpillar | 9.72 | −22.54% | 1.76% |
| Home Depot | 8.44 | −25.23% | 0.77% |
| Nike | 7.64 | 4.00% | 0.63% |
| United Technologies | 7.60 | 7.46% | 0.99% |
| American Express | 7.30 | 0.84% | 0.89% |
| McDonald’s | 6.74 | 3.09% | 0.90% |
| Goldman Sachs | 6.60 | −10.09% | 2.00% |
| Boeing | 5.55 | −9.10% | 0.99% |
| Travelers | 3.97 | −0.18% | 1.55% |
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