- Intel's short interest dipped in early July.
- Short interest in the chip giant is at a 23-month low.
- Nearly 37% of shorts have covered since the peak.
- Momentum continues in a positive direction. Stay long.
As the PC industry struggled in recent years, chip giant Intel (NASDAQ:INTC) was one name that went through a rough patch. Revenues declined slightly, profits fell, and short sellers piled in. However, things have turned in recent quarters, and Intel shares are now at multi-year highs. Intel's latest earnings report was its best in a number of years, and that was after a positive pre-announcement. Even before that earnings report, shorts continued to flee the name. Today, I'll discuss the latest report on short interest and what it means for investors.
We recently got the mid-July update on short interest, and it showed a decline of nearly 13 million shares from the previous update. Less than 162 million shares are currently short, which is almost 37% less than the peak set in October 2013. In the chart below, you can see a history of Intel's short interest going back to the early stages of 2012. While the current number is a small fraction of Intel's roughly 5 billion shares outstanding, Intel remains the most heavily shorted name in large cap US tech.
The latest short interest update is significant because this is the lowest short count since August of 2012. That's 23 months ago, about a month before Intel's Q3 warning that was the main driver of Intel's late 2012 fall. It is obvious that shorts have realized Intel's major turnaround, and they are scrambling as fast as possible. With Intel rallying even more after the latest earnings report, I would expect short interest to decline again at the end of July update. Intel is headed in the right direction, and investors should remain long the name.
Additional disclosure: Investors are always reminded that before making any investment, you should do your own proper due diligence on any name directly or indirectly mentioned in this article. Investors should also consider seeking advice from a broker or financial adviser before making any investment decisions. Any material in this article should be considered general information, and not relied on as a formal investment recommendation.