YORW: Insiders Vs. Shorts

The most recent short interest data was recently released by the NASDAQ for the 05/31/2013 settlement date, and York Water Co ( YORW) is one of the most shorted stocks of the Russell 3000, based on 9.80 "days to cover" versus the median component at 4.86. There are a number of ways to look at short data, but one metric that we find particularly useful is the "days to cover" because it considers both the total shares short and the average daily volume of shares typically traded. The number of shares short is then divided by the average daily volume, to express the total number of trading days it would take to close out all of the open short positions if every share traded represented a short position being closed.

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In the case of York Water Co ( YORW), the total short interest at the 05/31/2013 settlement date was 233,345 shares, which compares to the average daily trading volume of just 23,814 shares, for a "days to cover" ratio of 9.80.

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. At the present levels of short interest, if from this point forward every single YORW share traded represented a short position being closed, then at the average daily volume of 23,814 shares it would only be during the 10th trading day that every short position would be closed.

So it would stand to reason that should some unexpectedly good news come out, and short sellers did not have 10 days of patience but instead wanted to cover their short positions very suddenly, that situation could result in sending the stock higher until the higher price produces enough sellers to generate the necessary volume to close out those positions quickly.

York Water Co ( YORW) has something relatively rare for a stock with this much short interest, that being insiders taking the other side of the trade. Looking back over the trailing six month period, YORW has seen 13 different instances of insider buying, as summarized by the table below:

Purchased Insider Title Shares Price/Share Value
01/15/2013 Michael W. Gang Director 73 $17.52 $1,283.32
01/15/2013 John L. Finlayson Director 183 $17.52 $3,205.49
01/15/2013 Cynthia Dotzel Director 43 $17.52 $747.56
01/15/2013 Ernest J. Waters Director 1 $17.52 $14.82
01/15/2013 Steven R. Rasmussen Director 0 $17.52 $5.36
01/15/2013 Jeffrey S. Osman Director 3 $17.52 $45.39
01/16/2013 Vernon L. Bracey Vice President - Customer Svc. 8 $17.36 $145.78
01/16/2013 Joseph Thomas Hand Chief Operating Officer 181 $16.95 $3,061.25
01/16/2013 Jeffrey R. Hines President & CEO 722 $17.11 $12,362.25
01/16/2013 Kathleen M. Miller Chief Financial Officer 199 $16.83 $3,354.53
01/16/2013 Bruce C. McIntosh VP Human Resources / Secretary 41 $17.49 $719.33
01/16/2013 John H. Strine Vice President - Operations 120 $16.95 $2,033.31
01/16/2013 Mark S. Snyder Vice President - Engineering 51 $16.71 $851.22
04/15/2013 John L. Finlayson Director 171 $18.90 $3,232.11
04/15/2013 Cynthia Dotzel Director 40 $18.90 $753.76
04/15/2013 Michael W. Gang Director 68 $18.90 $1,293.97
04/15/2013 Steven R. Rasmussen Director 0 $18.90 $5.41
04/15/2013 Jeffrey S. Osman Director 2 $18.90 $45.76
04/15/2013 Ernest J. Waters Director 1 $18.90 $14.93
04/16/2013 Joseph Thomas Hand Chief Operating Officer 170 $18.18 $3,087.43
04/16/2013 Vernon L. Bracey Vice President - Customer Svc. 8 $18.69 $146.99
04/16/2013 John H. Strine Vice President - Operations 58 $18.55 $1,075.60
04/16/2013 Mark S. Snyder Vice President - Engineering 48 $17.88 $858.81
04/16/2013 Kathleen M. Miller Chief Financial Officer 188 $18.03 $3,383.41
04/16/2013 Bruce C. McIntosh VP Human Resources / Secretary 115 $18.14 $2,077.36
04/16/2013 Jeffrey R. Hines President & CEO 678 $18.38 $12,467.10
06/03/2013 Jeffrey R. Hines President & CEO 226 $19.08 $4,304.45

Below is a chart showing the "days to cover" for YORW over time:

Loading+chart++2013+TickerTech.com

And looking at the chart below, YORW's low point in its 52 week range is $16.75 per share, with $19.64 as the 52 week high point — that compares with a last trade of $19.30.

York Water Co Moving Averages Chart

In recent trading, shares of York Water Co ( YORW) were changing hands at $19.30/share.

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