The most recent short interest data has just been released for the 02/15/2019 settlement date, and we here at Dividend Channel have sifted through this fresh data and screened out these five S&P 500 stocks. A metric we find particularly useful when comparing short interest data is the “days to cover” metric because it considers both the total shares short and the average daily volume of shares traded. For the five stocks below, we have detected a notable change in days to cover, not just from the prior reporting period but also going back a full month. The table below summarizes what we found, with the five columns showing data for each of the five stocks, and the rows showing the days to cover values first from the 01/15/2019 reporting period, then the most recent 02/15/2019 reporting period, followed by the change and percentage change:
| PRGO | UAL | TIF | RHT | KSS | |
|---|---|---|---|---|---|
| 01/15/2019 | 3.09 | 3.86 | 2.80 | 3.47 | 5.23 |
| 02/15/2019 | 6.84 | 7.59 | 6.13 | 6.61 | 8.38 |
| Change | 3.75 | 3.73 | 3.33 | 3.15 | 3.15 |
| % Change | 121.21% | 96.54% | 118.99% | 90.85% | 60.15% |
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At Perrigo Company, average daily volume at the 02/15/2019 settlement saw a decrease to 1,237,398, as compared to 2,095,239 at the 01/15/2019 report. That brought days to cover up to 6.84, a 121.21% increase from the 3.09 days to cover calculated at the 01/15/2019 settlement date. Looking at total shares short, there was a 1,984,454 share increase to 8,460,257, a rise of 30.64% since 01/15/2019. The below chart shows the historical days to cover for PRGO at previous short interest release dates:
Meanwhile at United Continental Holdings, average daily volume at the 02/15/2019 settlement moved lower to 2,489,351, as compared to 4,672,274 at the 01/15/2019 report. That brought days to cover up to 7.59, a 96.54% increase from the 3.86 days to cover calculated at the 01/15/2019 settlement date. Looking at total shares short, there was a 850,578 share increase to 18,887,278, an increase of 4.72% since 01/15/2019. The chart below shows the historical days to cover for UAL at previous short interest release dates:
Over at Tiffany, average daily volume at the 02/15/2019 settlement decreased to 1,205,819, as compared to 2,187,615 at the 01/15/2019 report. The resulting days to cover value was up to 6.13, a 118.99% increase from the 2.80 days to cover calculated at the 01/15/2019 settlement date. Looking at the running total of all outstanding shorted shares, there was a 1,268,643 share increase to 7,395,146, a 20.71% increase since 01/15/2019. The below chart plots the historical days to cover for TIF at prior short interest release dates over time:
At Red Hat Inc, average daily volume at the 02/15/2019 settlement declined to 1,509,414, as compared to 2,506,333 at the 01/15/2019 report. The days to cover calculation moved up to 6.61, a 90.85% increase from the 3.47 days to cover calculated at the 01/15/2019 settlement date. Looking at the total of all open short positions, there was a 1,297,585 share increase to 9,984,605, a 14.94% rise since 01/15/2019. The chart below shows the days to cover over time for RHT at previous short interest release dates:
And at Kohl’s, average daily volume at the 02/15/2019 settlement decreased to 3,118,911, as compared to 4,453,643 at the 01/15/2019 report. That brought days to cover up to 8.38, a 60.15% increase from the 5.23 days to cover calculated at the 01/15/2019 settlement date. Looking at total shares short, there was a 2,833,076 share increase to 26,138,351, an increase of 12.16% since 01/15/2019. The following chart plots the historical days to cover for KSS at previous short interest release dates over time:
An increased “days to cover” value could indicate that short sellers are using these stocks to hedge long bets elsewhere, or could also mean that short sellers believe the stocks will decline in price. When short sellers eventually cover their positions, by definition there must be buying activity because a share that is currently sold short must be purchased to be covered. So investors tend to keep an eye on that days to cover metric, because a high value could predict a sharper price increase should a company put out some unexpectedly good news — short sellers might then rush to cover their positions, and if the days to cover number is high, it would then be more difficult to close those positions without sending a stock higher (until the higher price produces enough sellers to generate the necessary volume the short sellers need to close their positions).
In afternoon trading Thursday, PRGO was up about 4.5% on the day, UAL was up about 0.1%, TIF was down about 1.1%, RHT was trading flat, and KSS was off about 0.5%.
