Apr 7, 2016

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The Healthcare Shorts Report: Johnson & Johnson (JNJ), Pfizer Inc. (PFE), Merck & Co. Inc. (MRK)

The Healthcare Shorts Report: Johnson & Johnson (JNJ), Pfizer Inc. (PFE), Merck & Co. Inc. (MRK)

Short interest is a measure of how many shares of any given security have been sold short in a period of time. Typically, a stock exchange produces a monthly report on the total amount of short interest in any given stock. This number is expressed as a percentage of stocks sold short which have not yet been covered compared to the total outstanding shares of the stock. The higher the short interest, the more investors are betting the stock will fall in price. However, a very high short interest can be the predecessor to a rise in stock price.

A stock’s short interest ratio (SIR) indicates how many trading days it would take to cover (i.e., buy back) all existing shorted shares at the stock’s average daily trading volume. To arrive at this number, the total short interest on a given stock is divided by the equity’s typical daily volume.

As with the short-to-float ratio, there’s no distinct line in the sand — but a SIR at or above 5.00 is generally considered noteworthy, since that figure suggests it would take a week for all of the existing short positions to be covered.

Short interest data is released on a semi-monthly basis by the major U.S. Exchanges, with new data coming out around the second and fourth week of each month. Accordingly, each reporting period covers a roughly two-week span of time.

If the number of shorted shares declined during the latest two-week period, it suggests the short sellers have been buying back their bearish bets. Conversely, an increase in the number of shares sold short reveals that new pessimistic positions have been created.

As of 15/03/2016 short interest for Johnson & Johnson (JNJ) stood at 25843436 shares, a decrease of -2995257 shares or -11.59 percent compared to 28838693 shares on 01/03/2016. This short interest comprises 1 percent of the entire float. Short interest ratio now stands at 3.24 at the average volume of 7985162 shares.

According to the latest short-interest data for the two-week period ended 15/03/2016 short interest for the stock of Pfizer Inc. (PFE) increased from 172536755 shares at the end of the settlement date of 01/03/2016 to 322673739 shares, marking a growth of 150136984 shares or 46.53 percent. The current short interest accounts for 5.28 percent of the company’s total outstanding common shares and the days-to-cover short interest ratio, on the other hand, is 7.080886 as of 15/03/2016 assuming average daily trading volume of 45569681 shares.

Short interest for the shares of Merck & Co. Inc. (MRK) fell -3.48 percent from 34338111 shares on 01/03/2016 to 33184632 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 3.281061 days. It is based on average daily trading volume of 10113994 shares.

 

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