BKD: Insiders vs. Shorts

The most recent short interest data was recently released for the 10/31/2016 settlement date, and Brookdale Senior Living Inc ( BKD) is one of the most shorted stocks of the Russell 3000, based on 7.06 "days to cover" versus the median component at 6.43. 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 Brookdale Senior Living Inc ( BKD), the total short interest at the 10/31/2016 settlement date was 19,078,441 shares, which compares to the average daily trading volume of just 2,701,879 shares, for a "days to cover" ratio of 7.06.

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 BKD share traded represented a short position being closed, then at the average daily volume of 2,701,879 shares it would only be during the 8th trading day that every short position would be closed.

If you liked this article you might like

These Stocks Are Ready to Reverse Course

The 10% Pop in H&R Block Has Nothing to Do With the Fed

Fed Has Nothing to Do With the 10% Pop in H&R Block

Analysts' Actions -- Adobe, Starbucks, Snap, KB Home and More

Brookdale Is Exploring Its Options