ONB: Insiders vs. Shorts

The most recent short interest data was recently released by the NASDAQ for the 05/15/2015 settlement date, and Old National Bancorp (ONB) is one of the most shorted stocks of the Russell 3000, based on 6.81 "days to cover" versus the median component at 5.60. 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 Old National Bancorp ( ONB), the total short interest at the 05/15/2015 settlement date was 4,245,811 shares, which compares to the average daily trading volume of just 623,542 shares, for a "days to cover" ratio of 6.81.

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 ONB share traded represented a short position being closed, then at the average daily volume of 623,542 shares it would only be during the 7th 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 7 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.

Old National Bancorp ( ONB) 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, ONB has seen 10 different instances of insider buying, as summarized by the table below:

Purchased Insider Title Shares Price/Share Value
12/16/2014 Robert G. Jones PRESIDENT AND CEO 255 $13.93 $3,551.08
02/04/2015 Randall T. Shepard Director 1,000 $13.46 $13,455.00
03/17/2015 Robert G. Jones PRESIDENT AND CEO 275 $14.24 $3,914.95
04/29/2015 Randall T. Shepard Director 1,000 $13.55 $13,551.00
04/29/2015 Andrew E. Goebel Director 2,500 $13.61 $34,034.40
04/29/2015 Niel C. Ellerbrook Director 10,000 $13.84 $138,400.00
04/29/2015 Christopher A. Wolking SEVP - CFO 100 $13.81 $1,380.76
04/29/2015 James C. Ryan III EVP-DIR CORPORATE STRATEGY 1,000 $13.75 $13,750.00
04/29/2015 Robert G. Jones PRESIDENT AND CEO 3,680 $13.80 $50,781.42
04/29/2015 Kelly N. Stanley Director 1,500 $13.87 $20,804.85
04/29/2015 Alan W. Braun Director 10,000 $13.80 $137,993.00
05/01/2015 John R. Kamin CHIEF INFORMATION OFFICER 200 $13.68 $2,736.00
05/06/2015 Daugherty Julie Williams CHIEF ADMINISTRATIVE OFFICER 358 $13.62 $4,875.92
05/27/2015 Christopher A. Wolking SEVP - CFO 100 $13.71 $1,370.75

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

Loading+chart++2015+TickerTech.com

And looking at the chart below, ONB's low point in its 52 week range is $12.05 per share, with $15.16 as the 52 week high point — that compares with a last trade of $14.39.

Old National Bancorp  Moving Averages Chart

In recent trading, shares of Old National Bancorp ( ONB) were changing hands at $14.39/share.

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