When the first-quarter earnings reporting season kicked off back in April, it looked at first like the overall solid results might provide a boost for the faltering markets, but as the month wore on, the big U.S. indices dithered somewhat. Ultimately, though, it seems the results were enough to help offset such concerns rising interest rates and potential trade wars. The broad markets are up at least 3% so far in May.
Judging by the most shorted stocks traded on the New York Stock Exchange between the April 30 and May 15 settlement dates, those sellers were becoming more discriminating — in fact they focused on one favorite: Sprint. Other moves among these stocks were mixed and mild, although Chesapeake Energy managed to reclaim the top spot on the list in the first two weeks of May.
Note that the six most shorted NYSE stocks still 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 110 million shares.
The number of Chesapeake Energy Corp.’s (NYSE: CHK) shares short grew about 2% in the most recent period, allowing this oil and gas company to again top the list. The reported short interest of more than 195.91 million shares was 21.8% of the total float, and it was the third time since mid-February that the total was less than 200 million. At the posted daily average trading volume on the settlement date, it would take about six days to cover all the short positions.
Chesapeake reported better-than-expected quarterly earnings during the short interest period. Its share price ended those two weeks about 26% higher than where it began, while the S&P 500 was up less than 3% between the settlement dates. The stock has almost doubled that gain since then, and it ended trading at $4.55 a share on Thursday. That is more than 54% higher year to date. Shares have changed hands as high as $5.68 and as low as $2.53 in the past year.
AT&T Inc. (NYSE: T) slipped to the number two spot despite a fractional gain in the number of its shares short a year-to-date high as of the most recent settlement date. The latest reading of more than 193.91 million represented 3.2% of the company’s total float. As of the middle of this month, it would take around six days to cover all short positions, after the average daily trading volume increased somewhat in the period.
Some analysts now see AT&T as a contrarian play with upside potential. The share price declined about 2% in the first two weeks of May, though it was down almost 5% at one point in the period, and it has all but recovered in the past week. Shares ended trading on Thursday at $32.78 a share, which is down more than 15% year to date. AT&T has changed hands between $31.17 and $39.80 a share in the past 52 weeks.
This month, Sprint Corp. (NYSE: S) saw its short interest surge more than 32%, lifting it back into the top six most shorted NYSE stocks. That was a gain of about 36.95 million during those two weeks to 151.21 million, which was 26.3% of the telecom’s total float, and the greatest number of shares short so far this year. The days to cover rose from about five to six in the period as the daily average volume pulled back.
A possible Sprint merger with T-Mobile was still on the table early this month. The stock ended the latest short interest period down more than 8%, most of that decline early in the period, but it has crept up about 1% since then. The shares closed most recently at $5.16 apiece, which is down about 13% year to date. They hit a 52-week high of $9.65 last June, which compares to the 52-week low of $4.81 seen last month.