With the holiday shopping season looking strong and tax reform coming to pass as last year wound to a close, how were short sellers positioning themselves for the coming year? Judging by the most shorted stocks traded on the New York Stock Exchange between the December 15 and December 29 short interest settlement dates, they were mostly ready to lighten up on those stocks. The number of shares short in most of these stocks shrank.
After two periods in a row of rising short interest in Bank of America, short sellers backed off the stock such that it led the downward trend. On the other hand, the number of Weatherford shares short saw a minimal rise in the number of its shares short.
Note that the six most shorted NYSE stocks all had more than 130 million shares short at the end of the most recent settlement period. In fact, all the top 10 had short interest of more than 100 million shares.
AT&T Inc. (NYSE: T) once again tops the list, despite more than an 8% drop to more than 185.09 million shares short on the most recent settlement date. That was the fourth consecutive decline, down from a 52-week high over 230 million. The latest reading represented 3.0% of the company’s float. As of the end of last month, it would take around eight days to cover all short positions, due to a decline in the average daily trading volume.
AT&T is preparing to roll out super-fast 5G. In the latter two weeks of December, investors watched the share price fall about 2% but then end the period fractionally higher. The stock has retreated again since the beginning of the year and ended Wednesday’s trading at $36.62 a share, which is in the same ballpark as it was six months ago. AT&T shares have traded hands between $32.55 and $42.70 in the past 52 weeks.
The reported number of Rite Aid Corp. (NYSE: RAD) shares sold short barely retreated to more than 161.69 million as of the most recent settlement date. That followed declines in the previous two periods, but it was the 11th straight period with more than 100 million shares short. The latest figure still was 15.4% of the retailer’s total float. The average daily trading volume decreased again in the most recent period, but the days to cover remained about eight.
The short interest period ended before Rite Aid’s recent disappointing earnings report. Its shares ended the final two weeks of the year more about 5% higher, though it was up around 10% earlier in the period. The stock closed most recently at $2.13 a share, which was more than 8% lower than it was six months ago. Rite Aid shares have traded between $1.38 and $8.77 a piece in the past year.
The number of Chesapeake Energy Corp.’s (NYSE: CHK) shares short has risen in most periods in the past year, but in the latest period it saw a decline of more than 4% to more than 158.18 million. That represented 17.7% of the oil and gas company’s float. At the posted daily average trading volume on the settlement date, it would take about seven days to cover all the short positions.
Bitter cold sent natural gas prices sharply higher as the year wound down. While its share price ended the two weeks about 12% higher, Chesapeake has retreated somewhat since then. The S&P 500 saw a fractional decline between the settlement dates. The stock closed Wednesday’s trading at $4.00 a share, which is about 14% lower than six months ago. The 52-week low of $3.41 was seen back in October. Shares have changed hands as high as $7.29 in the past year.