December turned out to be one of the most brutal for stock investors in many years. That should have been good news for short sellers, depending on how they had themselves positioned headed into the end of the year. Judging by the most shorted stocks traded on the New York Stock Exchange between the December 14 and December 31 settlement dates, those sellers were loading up on a few of their favorites.
Those stocks at the top of the list, Chesapeake Energy and General Electric, saw sizable increases in the numbers of their share short during the two-week period. On the other hand, Bank of America and J.C. Penney had modest declines in their short interest in that time.
Note that the five most shorted NYSE stocks had more than 120 million shares short at the end of the most recent settlement period. In fact, all of the top 10 had short interest of more than 100 million shares.
The number of Chesapeake Energy Corp.’s (NYSE: CHK) shares short jumped about 22% in the most recent period, affirming this oil and gas company’s spot at the top of the list. The reported short interest of more than 198.66 million shares represented 22.2% of the total float. The year-to-date peak back in March was over 210 million shares short. At the posted daily average trading volume on the latest settlement date, it would take about four days to cover all the short positions.
The volatility and market downturn had Chesapeake hitting new 52-week lows as the year wound down. Its share price dropped almost 25% but then recovered somewhat to end those two weeks a little more than 9% lower. The S&P 500 retreated more than 4% in that time. The stock now trades more than 21% higher than a week ago, and it ended Thursday at $2.73 a share. That still is almost 41% lower over the past 90 days. Shares have changed hands as high as $5.60 and as low as $1.71 in the past year.
General Electric Co. (NYSE: GE) jumped into second place with around a 9% pop in the number of its short shares in the latter two weeks of last month. Note that it was the highest level of short interest since last March. The more than 152.09 million shares reported most recently represented 1.8% of the conglomerate’s total float. The daily average trading volume grew somewhat during the period, but the days to cover remained at less than one.
Restructuring moves at GE had some wondering if the parts were worth more than the whole. The shares ended the two weeks about 7% higher, despite being up about 12% earlier in the period. In the final two weeks of last month, the Dow Jones industrial average pulled back about 4%. GE’s share price was last seen at $8.94, up from a multiyear low of $6.66 last month. The 52-week high, seen early last year, was $19.39 a share. The stock has lost nearly a third of its value in the past 90 days.