The August short interest numbers show that Home Depot (HD) and Lowe’s (LOW) had spikes in shares sold short. At HD that number hit 61.8 million, up 20.8 million. At LOW the figure rose 6.5 million to 43.7 million.
The rise indicates that, even with the stocks beaten down, some on Wall St. believe that the housing and mortgage mess will get worse and drag the two retailers down further.
Over the last month HD is down 12% to $34.45, fairly near its 52-week low. Poor earnings and concerns that a deal to sell it wholesale operation have hurt the share price. A fair number of investors may believe that the sale of the HD Supply unit to private equity interests could be killed by the current credit market environment.
Over at Lowe’s shareholder are more sanguine. The stock was upgraded by JP Morgan and UBS. Analysts figure that LOW will take market share from its larger rival. Shares are up 2.5% to $29.65 on the news.
But, there are a number of folks who don’t buy into a turnaround at Lowe’s. Perhaps they believe that market share will not help if the market shrinks enough.
Douglas A. McIntyre