Feb 24, 2016

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The Services Sector Shorts Report: Southwest Airlines Co. (LUV), Hilton Worldwide Holdings Inc. (HLT), Nordstrom Inc. (JWN)

The Services Sector Shorts Report: Southwest Airlines Co. (LUV), Hilton Worldwide Holdings Inc. (HLT), Nordstrom Inc. (JWN)

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 29/01/2016 short interest for Southwest Airlines Co. (LUV) stood at 23986593 shares, an increase of 9060904 shares or 37.77 percent compared to 14925689 shares on 15/01/2016. This short interest comprises 4 percent of the entire float. Short interest ratio now stands at 2.64 at the average volume of 9098474 shares.

According to the latest short-interest data for the two-week period ended 29/01/2016 short interest for the stock of Hilton Worldwide Holdings Inc. (HLT) increased from 12208754 shares at the end of the settlement date of 15/01/2016 to 13359591 shares, marking a growth of 1150837 shares or 8.61 percent. The current short interest accounts for 2.56 percent of the company’s total outstanding common shares and the days-to-cover short interest ratio, on the other hand, is 1.303907 as of 29/01/2016 assuming average daily trading volume of 10245815 shares.

Short interest for the shares of Nordstrom Inc. (JWN) rose 1.12 percent from 25346067 shares on 15/01/2016 to 25632047 shares on 29/01/2016. Investors have taken short positions on 19 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 7.771672 days. It is based on average daily trading volume of 3298138 shares.

 

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