FXstreet

The most recent short interest data has just been released by the NASDAQ for the 07/31/2014 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 06/30/2014 reporting period, then the most recent 07/31/2014 reporting period, followed by the change and percentage change:

WU	MON	IRM	BBBY	COH
06/30/2014	9.97	1.99	2.46	2.96	2.05
07/31/2014	18.09	9.80	8.37	8.46	7.53
Change	8.11	7.81	5.91	5.51	5.48
% Change	81.34%	393.11%	239.78%	186.18%	267.87%

At Western Union (NYSE: WU), average daily volume at the 07/31/2014 settlement saw a decrease to 3,896,939, as compared to 6,771,532 at the 06/30/2014 report. That brought days to cover up to 18.09, a 81.34% increase from the 9.97 days to cover calculated at the 06/30/2014 settlement date. Looking at total shares short, there was a 2,942,333 share increase to 70,485,459, a rise of 4.36% since 06/30/2014. The below chart shows the historical days to cover for WU at previous short interest release dates:



Meanwhile at Monsanto (NYSE: MON), average daily volume at the 07/31/2014 settlement moved higher to 4,177,631, as compared to 3,745,837 at the 06/30/2014 report. That brought days to cover up to 9.80, a 393.11% increase from the 1.99 days to cover calculated at the 06/30/2014 settlement date. Looking at total shares short, there was a 33,499,924 share increase to 40,945,183, an increase of 449.95% since 06/30/2014. The chart below shows the historical days to cover for MON at previous short interest release dates:



Over at Iron Mountain (NYSE: IRM), average daily volume at the 07/31/2014 settlement decreased to 1,577,395, as compared to 3,531,486 at the 06/30/2014 report. The resulting days to cover value was up to 8.37, a 239.78% increase from the 2.46 days to cover calculated at the 06/30/2014 settlement date. Looking at the running total of all outstanding shorted shares, there was a 4,502,921 share increase to 13,201,396, a 51.77% increase since 06/30/2014. The below chart plots the historical days to cover for IRM at prior short interest release dates over time:



At Bed, Bath & Beyond, Inc. (NASD: BBBY), average daily volume at the 07/31/2014 settlement declined to 3,278,415, as compared to 5,534,741 at the 06/30/2014 report. The days to cover calculation moved up to 8.46, a 186.18% increase from the 2.96 days to cover calculated at the 06/30/2014 settlement date. Looking at the total of all open short positions, there was a 11,379,636 share increase to 27,750,020, a 69.51% rise since 06/30/2014. The chart below shows the days to cover over time for BBBY at previous short interest release dates:



And at Coach, Inc. (NYSE: COH), average daily volume at the 07/31/2014 settlement decreased to 4,000,503, as compared to 13,549,960 at the 06/30/2014 report. That brought days to cover up to 7.53, a 267.87% increase from the 2.05 days to cover calculated at the 06/30/2014 settlement date. Looking at total shares short, there was a 2,388,399 share increase to 30,130,581, an increase of 8.61% since 06/30/2014. The following chart plots the historical days to cover for COH 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).


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