Apr 7, 2016

Posted by in Stock Market News | 0 Comments

3 Healthcare Short Selling Trends You May Have Missed: CVS Health Corporation (CVS), Bristol-Myers Squibb Company (BMY), Medtronic plc (MDT)

3 Healthcare Short Selling Trends You May Have Missed: CVS Health Corporation (CVS), Bristol-Myers Squibb Company (BMY), Medtronic plc (MDT)

Short selling is one way to give a person the ability to profit from a falling stock. It is the selling of a security that the seller doesn’t own. One borrows a stock (or futures contract or option), then sells it, hoping to replace those borrowed shares by buying them back at a lower price and thus earning a profit.

If the security goes up from the price at which you initially sold, your loss is the difference, and it can be unlimited.  That’s the risky part of short-selling – your potential profit is limited while your risk is unlimited (if you are un-hedged).

Short interest is the total number of shares of a stock that have been sold short but not yet covered.

A large increase or decrease in short interest can be a good indicator of sentiment.  A high (or rising) short interest means that a large amount of people believe that a stock will go down, similar to the short futures contracts from the Commitments of Traders data and high put/call ratios.

The short-interest ratio is the total number of shares sold short (short interest) divided by average daily volume. This is also called days to cover because it shows – given the security’s average trading volume – how many days it will take to cover all of the short positions. The higher the ratio, the longer it would take to buy back the borrowed shares, and the potentially more bullish it is.  It is potentially bullish because if some positive catalyst occurs, then there may be heavy buying demand from those short looking to cover (buy back) their shares.

As of 15/03/2016 short interest for CVS Health Corporation (CVS) stood at 15036486 shares, an increase of 1557028 shares or 10.35 percent compared to 13479458 shares on 01/03/2016. This short interest comprises 1 percent of the entire float. Short interest ratio now stands at 3.85 at the average volume of 3900606 shares.

According to the latest short-interest data for the two-week period ended 15/03/2016 short interest for the stock of Bristol-Myers Squibb Company (BMY) increased from 22715162 shares at the end of the settlement date of 01/03/2016 to 25611734 shares, marking a growth of 2896572 shares or 11.31 percent. The current short interest accounts for 1.53 percent of the company’s total outstanding common shares and the days-to-cover short interest ratio, on the other hand, is 4.036686 as of 15/03/2016 assuming average daily trading volume of 6344743 shares.

Short interest for the shares of Medtronic plc (MDT) rose 17.13 percent from 13585683 shares on 01/03/2016 to 16393354 shares on 15/03/2016. Investors have taken short positions on 1 percent of the total common shares of the stock that are floating on the exchange. The days-to-cover short interest ratio is now at 2.6011 days. It is based on average daily trading volume of 6302470 shares.

 

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