The most recent short interest data was recently released by the NASDAQ for the 09/30/2015 settlement date, and Atlantic Power Corp (AT - Get Report) is one of the most shorted stocks of the Russell 3000, based on 7.57 "days to cover" versus the median component at 5.50. 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 Atlantic Power Corp ( AT - Get Report), the total short interest at the 09/30/2015 settlement date was 4,495,863 shares, which compares to the average daily trading volume of just 593,733 shares, for a "days to cover" ratio of 7.57.

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 AT share traded represented a short position being closed, then at the average daily volume of 593,733 shares it would only be during the 8th 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 8 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.

Atlantic Power Corp ( AT - Get Report) 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, AT has seen 4 different instances of insider buying, as summarized by the table below:

Purchased Insider Title Shares Price/Share Value
05/12/2015 James J. Moore Jr. Chief Executive Officer 18,253 $3.03 $55,317.53
05/26/2015 Kevin Howell Director 30,000 $3.20 $96,000.00
05/28/2015 James J. Moore Jr. Chief Executive Officer 82,000 $3.10 $253,900.00
05/29/2015 James J. Moore Jr. Chief Executive Officer 20,000 $2.98 $59,600.00
06/08/2015 James J. Moore Jr. Chief Executive Officer 20,000 $2.80 $56,000.00
06/09/2015 John Alexander McNeil Director 20,000 $2.81 $56,200.00
06/30/2015 James J. Moore Jr. Chief Executive Officer 20,000 $3.09 $61,800.00
06/30/2015 Gilbert Samuel Palter Director 8,800 $3.13 $27,544.00
08/14/2015 James J. Moore Jr. Chief Executive Officer 40,000 $2.24 $89,592.00
08/14/2015 Gilbert Samuel Palter Director 40,700 $2.27 $92,296.00
08/17/2015 Kevin Howell Director 10,000 $2.35 $23,500.00
08/18/2015 Gilbert Samuel Palter Director 19,300 $2.32 $44,744.00
08/19/2015 James J. Moore Jr. Chief Executive Officer 20,000 $2.20 $44,000.00
08/20/2015 James J. Moore Jr. Chief Executive Officer 20,000 $2.19 $43,900.00
08/21/2015 Kevin Howell Director 10,000 $2.12 $21,200.00
08/20/2015 Gilbert Samuel Palter Director 5,000 $2.16 $10,800.00
08/21/2015 James J. Moore Jr. Chief Executive Officer 10,000 $2.14 $21,400.00
09/03/2015 Kevin Howell Director 10,000 $2.15 $21,500.00

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

Loading+chart++2015+TickerTech.com

And looking at the chart below, AT's low point in its 52 week range is $1.79 per share, with $3.34 as the 52 week high point — that compares with a last trade of $2.13.

Atlantic Power Corp Moving Averages Chart

In recent trading, shares of Atlantic Power Corp ( AT - Get Report) were changing hands at $2.13/share.