QUIK: Insiders vs. Shorts

The most recent short interest data was recently released by the NASDAQ for the 04/15/2015 settlement date, and QuickLogic Corp (QUIK) is one of the most shorted stocks of the Russell 3000, based on 32.39 "days to cover" versus the median component at 6.09. 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 QuickLogic Corp ( QUIK), the total short interest at the 04/15/2015 settlement date was 8,157,411 shares, which compares to the average daily trading volume of just 251,854 shares, for a "days to cover" ratio of 32.39.

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 QUIK share traded represented a short position being closed, then at the average daily volume of 251,854 shares it would only be during the 33rd 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 33 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.

QuickLogic Corp ( QUIK) 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, QUIK has seen 2 different instances of insider buying, as summarized by the table below:

Purchased Insider Title Shares Price/Share Value
02/10/2015 Andrew J. Pease President and CEO 22,800 $2.21 $50,388.00
05/08/2015 Brian C. Faith VP WW Sales & Marketing 6,175 $1.63 $10,040.84
05/08/2015 Andrew J. Pease President and CEO 31,446 $1.62 $50,942.52

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

Loading+chart++2015+TickerTech.com

And looking at the chart below, QUIK's low point in its 52 week range is $1.51 per share, with $5.48 as the 52 week high point — that compares with a last trade of $1.66.

QuickLogic Corp Moving Averages Chart

In recent trading, shares of QuickLogic Corp ( QUIK) were changing hands at $1.66/share.

More from Stocks

Dow Trades Lower as Apple's Slump Offsets Gains in General Electric

Dow Trades Lower as Apple's Slump Offsets Gains in General Electric

Video: When Analyzing General Electric, Take Stock of Your Cost Basis

Video: When Analyzing General Electric, Take Stock of Your Cost Basis

Live at 11 a.m. ET: Our Columnists Talk General Electric

Live at 11 a.m. ET: Our Columnists Talk General Electric

Cigarette Stocks Have Been Smoked This Week -- Here's a Top Trade

Cigarette Stocks Have Been Smoked This Week -- Here's a Top Trade

What Do Trade Wars Mean for High Yield Bond Investors?

What Do Trade Wars Mean for High Yield Bond Investors?