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Five S&P 500 Stocks With Rising Short Activity

By Market News Video Staff, Tuesday, February 13, 12:46 PM ET

The most recent short interest data has just been released for the 01/31/2018 settlement date, and we here at Dividend Channel have sifted through this fresh data and screened out these five S&P 500 stocks. A metric we find particularly useful when comparing short interest data is the "days to cover" metric because it considers both the total shares short and the average daily volume of shares traded. For the five stocks below, we have detected a notable change in days to cover, not just from the prior reporting period but also going back a full month. The table below summarizes what we found, with the five columns showing data for each of the five stocks, and the rows showing the days to cover values first from the 12/29/2017 reporting period, then the most recent 01/31/2018 reporting period, followed by the change and percentage change:

AREEVHCSRECTASGIS
12/29/20172.348.285.324.747.08
01/31/201813.6112.567.957.259.55
Change11.274.272.632.512.47
% Change480.58%51.58%49.40%53.00%34.85%

At Alexandria Real Estate Equities Inc (ARE), average daily volume at the 01/31/2018 settlement saw a decrease to 657,839, as compared to 677,441 at the 12/29/2017 report. That brought days to cover up to 13.61, a 480.58% increase from the 2.34 days to cover calculated at the 12/29/2017 settlement date. Looking at total shares short, there was a 7,367,554 share increase to 8,956,142, a rise of 463.78% since 12/29/2017. The below chart shows the historical days to cover for ARE at previous short interest release dates:

Meanwhile at Envision Healthcare Corp (NYSE:EVHC), average daily volume at the 01/31/2018 settlement moved lower to 1,934,272, as compared to 2,757,608 at the 12/29/2017 report. That brought days to cover up to 12.56, a 51.58% increase from the 8.28 days to cover calculated at the 12/29/2017 settlement date. Looking at total shares short, there was a 1,444,370 share increase to 24,288,365, an increase of 6.32% since 12/29/2017. The chart below shows the historical days to cover for EVHC at previous short interest release dates:

Over at Sempra Energy (SRE), average daily volume at the 01/31/2018 settlement increased to 2,759,688, as compared to 1,636,546 at the 12/29/2017 report. The resulting days to cover value was up to 7.95, a 49.40% increase from the 5.32 days to cover calculated at the 12/29/2017 settlement date. Looking at the running total of all outstanding shorted shares, there was a 13,226,679 share increase to 21,932,131, a 151.94% increase since 12/29/2017. The below chart plots the historical days to cover for SRE at prior short interest release dates over time:

At Cintas Corporation (CTAS), average daily volume at the 01/31/2018 settlement declined to 556,177, as compared to 776,552 at the 12/29/2017 report. The days to cover calculation moved up to 7.25, a 53.00% increase from the 4.74 days to cover calculated at the 12/29/2017 settlement date. Looking at the total of all open short positions, there was a 352,574 share increase to 4,033,961, a 9.58% rise since 12/29/2017. The chart below shows the days to cover over time for CTAS at previous short interest release dates:

And at General Mills, Inc. (GIS), average daily volume at the 01/31/2018 settlement decreased to 3,381,074, as compared to 4,545,069 at the 12/29/2017 report. That brought days to cover up to 9.55, a 34.85% increase from the 7.08 days to cover calculated at the 12/29/2017 settlement date. Looking at total shares short, there was a 102,168 share increase to 32,278,883, an increase of 0.32% since 12/29/2017. The following chart plots the historical days to cover for GIS at previous short interest release dates over time:

An increased "days to cover" value could indicate that short sellers are using these stocks to hedge long bets elsewhere, or could also mean that short sellers believe the stocks will decline in price. When short sellers eventually cover their positions, by definition there must be buying activity because a share that is currently sold short must be purchased to be covered. So investors tend to keep an eye on that days to cover metric, because a high value could predict a sharper price increase should a company put out some unexpectedly good news short sellers might then rush to cover their positions, and if the days to cover number is high, it would then be more difficult to close those positions without sending a stock higher (until the higher price produces enough sellers to generate the necessary volume the short sellers need to close their positions).

In afternoon trading Tuesday, ARE was down about 0.2% on the day, EVHC was down about 1.2%, SRE was down about 0.5%, CTAS was trading flat, and GIS was off about 0.4%.


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