The most recent short interest data has been released for the 11/30/2017 settlement date, and we here at Dividend Channel like to sift through this fresh data and order the underlying components of the S&P 500 by "days to cover." There are a number of ways to look at short data, for example the total number of shares short; but one metric that we find particularly useful is the "days to cover" metric because it considers both the total shares short and the average daily volume of shares typically traded. The number of shares short is then compared to the average daily volume, in order to calculate 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.In our new rank based on the most recent short interest data, DaVita Inc ( DVA - Get Report) has taken over the position of #249 most shorted S&P 500 component, from NRG Energy Inc ( NRG) which is now in the #162 spot. The "days to cover" at 11/30/2017 was 3.55 for DVA, and 4.49 for NRG; this compares to the average across all S&P 500 components of 4.36 (up from the average back on the 11/15/2017 settlement date of 4.10). The chart below shows the movement over time of the "days to cover" values of both DVA and NRG, versus the average S&P 500 component. Below is a chart showing the relative positions of DVA versus NRG over time within the 500 S&P 500 components, with #1 representing the component with the highest "days to cover" value (most heavily shorted) and #500 representing the component with the lowest "days to cover" value (least heavily shorted): A stock with a high "days to cover" value compared to its peers would be considered to have a higher level of short interest as compared to those peers. This could mean short sellers are using the stock to hedge a long bet elsewhere, or could also mean that short sellers believe the price of the stock will decline. 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. So investors tend to keep an eye on that "days to cover" metric, because a high value could predict a sharper price increase should the company put out some unexpectedly good news — short sellers might rush to cover positions, and if the "days to cover" number is high, it is more difficult to close those positions without sending the stock higher until the higher price produces enough sellers to generate the necessary volume. Below is a three month price history chart comparing the stock performance of DVA vs. NRG: According to the ETF Finder at ETF Channel, DVA and NRG collectively make up 1.66% of the Guggenheim S&P 500 Pure Value ETF (RPV) which is up by about 0.2% on the day Tuesday.
More from Stocks
IBM, Netflix, Morgan Stanley, Honeywell, Brexit - 5 Things You Must Know
U.S. stock futures rise after a Brexit deal is reached; Netflix boosts international subscriber growth but sees U.S. weakness; IBM posts a third-quarter revenue miss; Honeywell and Morgan Stanley report earnings.
Market Rotation, the Fed, Consumer Weakness and a Play on CSX: Market Recon
Money fled high-growth, high-multiple stocks on Wednesday and chased a mix of both defense and value.
This Stock Is Your Portfolio's Missing 'Ingredion'
One of the world's largest corn refiners is now available at a bargain valuation, while also sporting a solid, and well-covered yield.
Dow Futures Spike as Britain Reaches EU Brexit Deal; Netflix Surges on Solid Q3
U.S. equity futures jump Thursday after Britain reaches a tentative Brexit deal that will see it leave the European Union later this month, offsetting investor concerns over growth and trade that had muted global markets earlier in the session.