Linear Technology Becomes #33 Most Shorted Nasdaq 100 Component, Replacing Texas Instruments

The most recent short interest data has been released by the NASDAQ for the 10/15/2013 settlement date, and we here at Dividend Channel like to sift through this fresh data and order the underlying components of the Nasdaq 100 by "days to cover." There are a number of ways to look at short data, for example the total number of shares short; but one metric that we find particularly useful is the "days to cover" metric because it considers both the total shares short and the average daily volume of shares typically traded. The number of shares short is then compared to the average daily volume, in order to calculate 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.

START SLIDESHOW:
The 25 Most Shorted Nasdaq 100 Stocks »

In our new rank based on the most recent short interest data from NASDAQ, Linear Technology Corp. ( LLTC) has taken over the position of #33 most shorted Nasdaq 100 component, from Texas Instruments Inc. ( TXN) which is now in the #35 spot. The "days to cover" at 10/15/2013 was 4.22 for LLTC, and 3.98 for TXN; this compares to the average across all Nasdaq 100 components of 4.33 (down from the average back on the 09/30/2013 settlement date of 4.36). The chart below shows the movement over time of the "days to cover" values of both LLTC and TXN, versus the average Nasdaq 100 component.

Loading+chart++2013+TickerTech.com

Below is a chart showing the relative positions of LLTC versus TXN over time within the 100 Nasdaq 100 components, with #1 representing the component with the highest "days to cover" value (most heavily shorted) and #100 representing the component with the lowest "days to cover" value (least heavily shorted):

Loading+chart++2013+TickerTech.com

A stock with a high "days to cover" value compared to its peers would be considered to have a higher level of short interest as compared to those peers. This could mean short sellers are using the stock to hedge a long bet elsewhere, or could also mean that short sellers believe the price of the stock will decline. 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 the company put out some unexpectedly good news — short sellers might rush to cover positions, and if the "days to cover" number is high, it is more difficult to close those positions without sending the stock higher until the higher price produces enough sellers to generate the necessary volume.

Below is a three month price history chart comparing the stock performance of LLTC vs. TXN:

LLTC,TXN Relative Performance Chart

According to the ETF Finder at ETF Channel, LLTC and TXN collectively make up 10.94% of the iShares PHLX Semiconductor ETF (SOXX) which is up by about 0.4% on the day Friday.

At last check, LLTC was up about 0.4%, while TXN was up about 0.7% on the day Friday.

null

More from Stocks

GE Is Too Opaque, Too Diversified and Too Poorly Managed: Doug Kass Insider

GE Is Too Opaque, Too Diversified and Too Poorly Managed: Doug Kass Insider

Dow Falls Over 200 Points as Apple's Slump Offsets Gains in General Electric

Dow Falls Over 200 Points as Apple's Slump Offsets Gains in General Electric

Week Ahead: Major Earnings on Tap as Wall Street Readies for Geopolitical Moves

Week Ahead: Major Earnings on Tap as Wall Street Readies for Geopolitical Moves

Google's YouTube in Hot Water Again Over Ads on Inappropriate Content

Google's YouTube in Hot Water Again Over Ads on Inappropriate Content

Should Tesla Nominate a New CEO Not Named Elon Musk?

Should Tesla Nominate a New CEO Not Named Elon Musk?