AXDX: Insiders vs. Shorts

The most recent short interest data was recently released by the NASDAQ for the 05/29/2015 settlement date, and Accelerate Diagnostics Inc (AXDX) is one of the most shorted stocks of the Russell 3000, based on 35.12 "days to cover" versus the median component at 6.38. 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 Accelerate Diagnostics Inc ( AXDX), the total short interest at the 05/29/2015 settlement date was 4,135,926 shares, which compares to the average daily trading volume of just 117,762 shares, for a "days to cover" ratio of 35.12.

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 AXDX share traded represented a short position being closed, then at the average daily volume of 117,762 shares it would only be during the 36th 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 36 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.

Accelerate Diagnostics Inc ( AXDX) 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, AXDX has seen 4 different instances of insider buying, as summarized by the table below:

Purchased	Insider	Title	Shares	Price/Share	Value
01/05/2015	Jack W. Schuler	Director	18,000	$18.93	$340,660.00
03/09/2015	Jack W. Schuler	Director	22,584	$17.18	$387,993.12
03/16/2015	Jack W. Schuler	Director	4,000	$20.55	$82,200.00
03/17/2015	Lawrence Mehren	PRESIDENT AND CEO	500	$20.48	$10,240.00
03/17/2015	John Patience	Director	2,000	$20.00	$40,000.00
03/19/2015	Matthew Strobeck	Director	2,000	$22.04	$44,080.00
04/17/2015	Jack W. Schuler	Director	11,000	$21.94	$241,310.00

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

Loading+chart++2015+TickerTech.com

And looking at the chart below, AXDX's low point in its 52 week range is $15.37 per share, with $31.86 as the 52 week high point — that compares with a last trade of $24.77.