After volatility roared back into the markets in early February, bringing with it the long overdue 10% correction, things seemed to settle down somewhat as the month wore on. Then volatility spiked again when March arrived, as concerns about rising interest rates were joined by fears of a trade war. Sell-offs can be good for short sellers, depending on how they are positioned and how nimble they are.
Judging by the most shorted stocks traded on the New York Stock Exchange between the February 15 to February 28 settlement dates, those sellers were cautious overall, as moves were mostly downward.
Struggling retailer Rite Aid led the trend, with a sharp drop in short interest allowing it to drop from the top six. Bucking that trend, Chesapeake Energy saw the numbers of its shares short jump by a double-digit percentage during those two weeks that included its latest quarterly report.
Note that the six most shorted NYSE stocks all had more than 125 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.
The number of Chesapeake Energy Corp.’s (NYSE: CHK) shares short has risen in many periods in the past year, but in the latest period it returned to the top spot on this list. A rise of almost 16% brought short interest to more than 207.70 million, or 31.8% of this oil and gas company’s float. At the posted daily average trading volume on the settlement date, it would take about four days to cover all the short positions.
Chesapeake wowed investors with its quarterly results reported in the period. While its share price ended those two weeks about 1% lower, the stock had been up more than 19% at one point. The S&P 500 saw just a fractional decrease between the settlement dates. The stock ended the week trading at $3.10 a share, which is more than 24% lower year to date. The 52-week low of $2.53 was seen last month. Shares have changed hands as high as $6.59 in the past year.
AT&T Inc. (NYSE: T) slipped into the number two spot with about a 4% decline in its shares short as of the most recent settlement date. The latest reading of more than 174.63 million is still down from a year-to-date high of over 193 million. In fact, the short interest has shrunk in most recent periods. The latest reading represented 2.8% of the company’s float. As the end of the month, it would take around eight days to cover all short positions, after the average daily trading volume fell sharply.
Analysts still love AT&T stock for its total return. In the final two weeks of February, investors watched the share price creep up more than 1% but end the period down about 2%. The share price has climbed again since then and ended Friday’s trading at $37.05 a share, which is down less than 4% from year to date. AT&T shares have traded hands between $32.55 and $42.70 in the past 52 weeks.
Weatherford International PLC (NYSE: WFT) hangs on to the third spot on the list despite a more than 9% retreat in the number of its shares sold short in the latter two weeks of February. That followed a 12% bump in its short interest in the previous period. The more than 158.66 million shares reported most recently represented 17.9% of the total float. The days to cover reading ended the period at around eight, as the average daily volume shrank.
At least one analyst saw a buying opportunity in Weatherford’s share price moves between the latest settlement dates. Short sellers watched the share price rise more than 12% but then end the period down more than 4%. Afterward, the stock recovered somewhat, and it closed most recently at $2.64 a share, up from a recent 52-week low of $2.42. The 52-week high, reached last April, was $6.86. The stock is now down more than 23% year to date.