As the markets tanked at the beginning of 2016, what were the short sellers up to? Perhaps not surprisingly, short interest was on the rise for most of the top six most heavily shorted stocks traded on the New York Stock Exchange. In fact, Alcoa, Freeport-McMoRan and Vale saw double-digit percentage increases between the December 31 and January 15 settlement dates. However, the most shorted NYSE stock, Chesapeake Energy, bucked the trend.
Note that the 10 most shorted NYSE stocks all had more than 100,000 shares short at the end of the most recent settlement period.
Short interest in Chesapeake Energy Corp. (NYSE: CHK) started off the year with a more than 4% drop to more than 230.91 million shares. That was the second consecutive period of decline, and it was 35.3% of the company’s float. The days to cover slipped to about 10 as the daily average volume rose to a three-month high. Chesapeake shares were downgraded early in the year. Short sellers watched the stock retreat more than 19% between the settlement dates, while the S&P 500 was down more than 6%. Shares closed most recently at $3.28, up from a recent multiyear low of $2.69. The 52-week high of $21.49 was seen almost a year ago.
Sprint Corp.’s (NYSE: S) short interest grew more than 3% in the first weeks of the month, the fifth period in a row with an expanding number of shares short. The most recent reading of around 224.31 million was 36.0% of the float, as well as the greatest number of shares short in at least a year. The days to cover dropped from more than 20 to about 13. During the period, we recognized Sprint as one of America’s most hated companies, and the share price ended the two-week period about 18% lower, despite being up around 4% at one point. The stock closed Wednesday at $2.92, in a 52-week trading range of $2.18 to $5.45.
After ending a four-period streak of rising short interest in the previous period, the number of Vale S.A. (NYSE: VALE) shares short resumed its climb, jumping almost 11% to more than 217.78 million. At the most recent average daily volume, it would take about nine days to cover all short positions. The stock was hitting 52-week lows during the market sell-off at the beginning of the year. The miner’s shares fell about 30% but regained about 5% by the end of the short-interest period. The stock hit its multiyear low of $2.13 this week, but ended Wednesday at $2.31. The 52-week high is $9.14.