Short sellers are an interesting breed of investors on Wall Street. To some investors it may even sound unpatriotic to bet on a stock going down rather than rising. Still, there are many reasons that traders, investors and even certain insiders might be short a stock, and they do not all lead to the price ultimately going lower. When it comes to the most aggressively shorted stocks on Wall Street, it probably leans more and more toward a belief that sentiment has built up too much or that there is another big trade of sorts in the works.
As the major markets have retreated from all-time highs, it feels as though the Trump rally become overextended. Judging by the most shorted stocks traded on the New York Stock Exchange and the Nasdaq, 24/7 Wall St. decided to take a look at the 10 most heavily shorted stocks on both exchanges.
Moves in the most heavily shorted stocks looked largely positive between the February 28 and March 15 settlement dates.
Sirius XM: King of the Short Sellers!
The more than 277.25 million Sirius XM Holdings Inc. (NASDAQ: SIRI) shares short by mid-March was barely lower than on the previous settlement date, but it was still the second greatest number of shares short so far this year. And it represents 18.0% of the float. At the most recent average daily volume, it would take less than 11 days to cover all short positions.
Note that Warren Buffett’s portfolio managers indirectly own Sirius shares via the Liberty shares, but Sirius XM has always been active among short sellers with such a low share price making the actual “dollars sold short” far less than some of the larger stocks. The stock ended the two-week period more than 4% higher, though it was up almost 7% at one point. The Nasdaq rose less than 2% between the settlement dates. The stock is currently trading more than 14% higher year to date. It closed Friday at $5.10 a share, in a 52-week trading range of $3.74 to $5.53.
Frontier Communications: Betting Against That Dividend!
After rising more modestly in the previous two periods, the number of shares short in Frontier Communications Corp. (NASDAQ: FTR) jumped about 15% more to almost 273.44 million on last look. That was 23.6% of the high-yield telecom’s float, as well as the 14th consecutive period with more than 200 million shares short. The daily average volume rose sharply and the days to cover dropped from more than six to around five.
Frontier has seen many downgrades of late betting against its outlook and against its double-digit yield dividend. The share price was down more than 17% by the middle of the month. The stock has continued to fall since then and hit a 52-week low of $1.92 on Friday. Shares closed most recently at $2.09. The 52-week high of $5.77 was seen almost a year ago.
Weatherford International: Good News Into High Short Selling!
Weatherford International PLC (NYSE: WFT) led the trend of more shares being sold short with a double-digit percentage gain in short interest during the period. Weatherford is once again the most shorted NYSE stock, following a 16.7% surge in short interest in the first two weeks of this month. The almost 137.87 million shares short represented 14.2% of this oil and gas driller’s total float. At the most current daily average, it would take roughly four days to cover all the short positions.
Weatherford named its new chief executive officer during the short interest period. Its shares ended the two weeks around 11% higher, while the S&P 500 was up about 1% in that time. The stock closed most recently at $5.89, which is about 18% higher year to date. Shares have changed hands between $3.73 and $8.49 in the past 52 weeks. Shares just surged on a very positive Schlumberger joint venture — and Wells Fargo gave a big upgrade!
Chesapeake Energy: Reminders of Years Past?
Chesapeake Energy Corp. (NYSE: CHK) had seen its number shares short go up each reporting period so far this year. It took a breather most recently, with short interest essentially flat as of mid-March. The almost 134.66 million shares short reported most recently were 15.3% of the float. Chesapeake’s days to cover reading was over three days.
Chesapeake saw some notable insider buying earlier this month. In the two-week period, short sellers watched the share price pull back more than 9% but then recover to end flat. It retreated again afterward and closed most recently at $5.22. That was still up handily from the multiyear low of $3.53 from almost a year ago, but less than the 52-week high of $8.20 seen in mid-December.