Apple Update: Short Interest Hits 2014 Low

Jul.28.14 | About: Apple Inc. (AAPL)


Apple's short interest hit a 2014 low in mid-July.

Shorts covered into earnings.

Reduction in short interest confirms positive momentum for the stock.

Investors should stay long Apple. Shares could top $100 soon.

When it comes to tech giant Apple (NASDAQ:AAPL), I've covered the name quite extensively. One item I haven't updated investors on recently is Apple's short interest. Since the most recent short interest update shows Apple's number at a new 2014 low, I figured it was time for a quick update on where things stand.

At the mid-July update, nearly 104 million shares were short. That number seems like a lot, considering the last time I updated short interest, the number was less than 20 million. Well, you have to remember that Apple split 7 for 1, so that has made the actual short interest number jump. The float and outstanding share count are up by a similar factor, so don't be alarmed by this higher number. In the chart below, you can see a history of Apple's split-adjusted short interest going back to April of 2012.

Short interest in mid-July was at its lowest point since the last update in 2013, where the split-adjusted number was around 99 million shares. Before that, the last sub-100 million split-adjusted number was in August of 2012. With Apple shares racing towards their all-time highs, it seems logical that shorts are covering, especially considering the strength of Apple's buyback. Shares have hit a new 52-week high after the latest quarterly report, even though the report was mixed. Investors are buying Apple ahead of the iPhone 6 launch, and shorts are running away. I think that pattern will continue, and Apple seems destined to cross $100 rather soon. Investors should remain long the stock as we approach the iPhone 6 launch and as Apple continues to buy back billions worth of stock each quarter.

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