Investing

Are Short Sellers Getting Scared of the Top Warren Buffett Stocks?

Short sellers are viewed with mixed emotions by the investing public. They have to be bad because they bet against stocks, but then again they may be on to something and they are supposed to be considered smart money. So what happens when investors see short sellers betting against or lightening up against the likes of the top stocks owned by Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-A)?

It turns out that short sellers have increased their bets against American Express Co. (NYSE: AXP), while it is facing trouble on its own. Still, the other top stocks such as Wells Fargo & Co. (NYSE: WFC), International Business Machines Corp. (NYSE: IBM), and Coca-Cola Co. (NYSE: KO) all saw decreases in their short interest. 24/7 Wall St. has covered each, Amex, Coca-Cola, IBM and Wells Fargo short interest trends in these four stocks in detail. We have also even looked at what short sellers are thinking about Buffet himself, via the Berkshire Hathaway Inc. (NYSE: BRK-B) shares.

24/7 has compared the short interest readings from the April 30 settlement date against the April 15 settlement date in the top four Warren Buffett stock holdings and in Berkshire Hathaway itself. Color has been added on each as well.

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Coca-Cola

Coke saw its short interest fall by 4.4% to 29,496,265 shares, as of the April 30 settlement date, down from 30,869,916 shares in mid-April. Short sellers had been heavily betting against Coca-Cola and its sugary drinks, but that seems to have mellowed substantially — the short interest was over 60 million last summer.

Coca-Cola shares were last seen trading around $40.90, with a 52-week range of $39.06 to $45.00 and a consensus analyst target price of about $44.75. Its yield is close to 3.2%, but Buffett’s cost basis makes it a much better yield for him.

IBM

IBM has seen its shares recover from lows, and short sellers have lightened up here. In fact, the short interest was down more than 9% from mid-April to 25,059,347 shares short as of the April 30 settlement date. Still, this is considered an elevated short interest. In his most recent holdings report, Buffett’s IBM stake was listed as 76.97 million shares.

With shares at $170.35, IBM has a 52-week range of $149.52 to $196.40 and a consensus price target that is down at about $160.75. IBM’s dividend yield is now close to 3%.

Wells Fargo

This is the biggest bank holding of Buffett, and it actually may be the largest outside bank stake by any investment group in America. Berkshire’s stake of 463 million shares or so of the nation’s top mortgage lender compares to an April 30 short interest reading of 26,664,565 shares. That is down over 6% from mid-April’s 28,500,878 shares short, as well as down handily from the more than 41 million shares short in mid-2014.

Buffett has halted his endless accumulation of Wells Fargo shares. Still, a share price of $55.26 compares to the consensus price target of $57.35 and the 52-week range of $46.44 to $56.29. Wells Fargo has a yield close to 2.6%, and it can keep raising that dividend ahead.

ALSO READ: Would Warren Buffett Consider Acquiring Harley-Davidson?

American Express

Amex saw its short interest rise by more than 26% to 12,096,843 shares, versus 9,549,970 shares in mid-April. Berkshire Hathaway owns about 151 million shares of American Express, so the short interest is probably irrelevant to Buffett, since he owns over 10 times the short interest.

American Express shares were down by 1% on Tuesday morning at $78.95. The 52-week range of $76.53 to $96.24 might indicate how bad things have been and why short sellers have targeted Amex. Its consensus target price of barely $86.00 has been drifting lower as well. Short sellers might think that Amex’s 1.3% dividend yield is still far too low as well — even if that may be massively higher for Buffett on his cost basis.

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