CLNE: Insiders vs. Shorts

The most recent short interest data was recently released by the NASDAQ for the 07/31/2014 settlement date, and Clean Energy Fuels Corp (CLNE) is one of the most shorted stocks of the Russell 3000, based on 19.34 "days to cover" versus the median component at 6.30. 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 Clean Energy Fuels Corp ( CLNE), the total short interest at the 07/31/2014 settlement date was 15,452,030 shares, which compares to the average daily trading volume of just 798,817 shares, for a "days to cover" ratio of 19.34.

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 CLNE share traded represented a short position being closed, then at the average daily volume of 798,817 shares it would only be during the 20th 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 20 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.

Clean Energy Fuels Corp ( CLNE) 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, CLNE has seen 5 different instances of insider buying, as summarized by the table below:

Purchased Insider Title Shares Price/Share Value
03/05/2014 Stephen Scully Director 5,000 $9.19 $45,925.50
03/06/2014 John S. Herrington Director 22,000 $9.15 $201,234.00
03/06/2014 Vincent C. Taormina Director 10,000 $9.22 $92,200.00
05/20/2014 James E. Oconnor Director 5,000 $9.60 $48,000.00
06/04/2014 Warren I. Mitchell Director 20,000 $10.27 $205,462.00

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

Loading+chart++2014+TickerTech.com

And looking at the chart below, CLNE's low point in its 52 week range is $8.27 per share, with $14.05 as the 52 week high point — that compares with a last trade of $9.51.

Clean Energy Fuels Corp Moving Averages Chart

In recent trading, shares of Clean Energy Fuels Corp ( CLNE) were changing hands at $9.51/share.

More from Stocks

Boeing's Blowout Quarter Proves Why There Won't Be a Stock Market Panic

Boeing's Blowout Quarter Proves Why There Won't Be a Stock Market Panic

An Explosive Move Is Coming for PayPal

An Explosive Move Is Coming for PayPal

Twitter Founder Jack Dorsey Deserves a Nice Tweet After Q1 Results

Twitter Founder Jack Dorsey Deserves a Nice Tweet After Q1 Results

Key Numbers for Investors to Watch as Amazon, Microsoft and Intel Report Results

Key Numbers for Investors to Watch as Amazon, Microsoft and Intel Report Results

Twitter Tops Wall Street's Estimates - Here Are the Key Numbers You Need to Know

Twitter Tops Wall Street's Estimates - Here Are the Key Numbers You Need to Know