The most recent short interest data has been released for the 01/12/2018 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, Essex Property Trust Inc ( ESS - Get Report) has taken over the position of #107 most shorted S&P 500 component, from McKesson Corp ( MCK) which is now in the #97 spot. The "days to cover" at 01/12/2018 was 5.03 for ESS, and 5.26 for MCK; this compares to the average across all S&P 500 components of 4.11 (down from the average back on the 12/29/2017 settlement date of 4.40). The chart below shows the movement over time of the "days to cover" values of both ESS and MCK, versus the average S&P 500 component. Below is a chart showing the relative positions of ESS versus MCK 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 ESS vs. MCK: ESS,MCK makes up 1.51% of the WisdomTree U.S. Domestic Economy Fund ETF (WUSA) According to Preferred Stock Channel, there is a series of preferred stock that is senior to ESS, which trades under the symbol ESS.PRH — more info ».
TheStreet’s Fundamentals of Investing Course will teach you the keys to making the right decisions in any market.
TheStreet’s Personal Finance Essentials Course will teach you money management basics and investing strategies to help you avoid major financial pitfalls.
TheStreet Courses offers dedicated classes designed to improve your investing skills, stock market knowledge and money management capabilities.
More from Stocks
Charles Schwab Shares Pop on Second-Quarter Earnings and Revenue Beat
Clients opened almost 400,000 accounts in Q2, bringing the total at the firm to 12 million.
Complacent Market Players Keep It Chill -- as Sparks Fly All 'Round
It is still a surprisingly sedate market, despite indexes sitting close to all-time highs, earnings season, possible interest-rate cuts and endless speculation about China trade.
Domino's Drops as Second-Quarter Revenues Miss Estimates
The world's top pizza chain earned $2.19 per share in the quarter versus expectations for $1.78. But total sales came in short of expectations.
Dow Ends Lower; Stocks Slip as Trump Fans China Trade Worries
The Dow ends down after reaching an intraday day Tuesday as President Trump says the U.S. and China have `a long way to go' before reaching a trade agreement.