CNX: Insiders vs. Shorts

The most recent short interest data was recently released by the NASDAQ for the 01/15/2014 settlement date, and CONSOL Energy Inc (CNX) is the #91 most shorted of the S&P 500 components, based on 5.88 "days to cover." 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.

START SLIDESHOW:
Ten Bargains You Can Buy Cheaper Than The Insiders Did »

In the case of CONSOL Energy Inc ( CNX), the total short interest at the 01/15/2014 settlement date was 12,748,909 shares, which compares to the average daily trading volume of just 2,168,449 shares, for a "days to cover" ratio of 5.88.

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 CNX share traded represented a short position being closed, then at the average daily volume of 2,168,449 shares it would only be during the 6th 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 6 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.

CONSOL Energy Inc ( CNX) 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, CNX has seen 2 different instances of insider buying, as summarized by the table below:

Purchased Insider Title Shares Price/Share Value
02/10/2014 Alvin R. Carpenter Director 30,000 $36.71 $1,101,300.00
02/10/2014 David M. Khani EVP & Chief Financial Officer 2,800 $36.67 $102,676.00

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

Loading+chart++2014+TickerTech.com

And looking at the chart below, CNX's low point in its 52 week range is $26.25 per share, with $39.57 as the 52 week high point — that compares with a last trade of $37.93.

CONSOL Energy Inc Moving Averages Chart

In recent trading, shares of CONSOL Energy Inc ( CNX) were changing hands at $37.93/share.

More from Stocks

GM's New Chevy Blazer Looks as Lame as the Stock Market Right Now

GM's New Chevy Blazer Looks as Lame as the Stock Market Right Now

OPEC, Bank Stress Tests, Disney and Tesla - 5 Things You Must Know

OPEC, Bank Stress Tests, Disney and Tesla - 5 Things You Must Know

GE Should Suspend Its Dividend: Goldman Sachs

GE Should Suspend Its Dividend: Goldman Sachs

Big Banks Pass the Stress Tests and 4 Other Stories to Watch Friday Morning

Big Banks Pass the Stress Tests and 4 Other Stories to Watch Friday Morning

Dow Logs Eighth Straight Drop as Stocks Slump

Dow Logs Eighth Straight Drop as Stocks Slump