- Short interest for Intel dropped in late July.
- Latest report shows 2+ year low.
- Q2 earnings report was extremely positive.
- Positive momentum confirmed, investors should stay long.
In late July, I updated investors on the continued decline in short interest for chip giant Intel (NASDAQ:INTC). At that point, short interest was at a 23-month low, and that data was before the company's strong earnings report that sent shares to multi-year highs. Today, I'm back to update investors on where short interest stands after the latest update from NASDAQ. The chart below shows Intel's short interest going back to early 2012, and I'll detail the changes after it.
(Note: Last data point on chart is for 7/31/14 settlement date)
In the second half of July, more than 26 million shares short were covered, a decline of more than 16%. Short interest at the end of July stood at just over 135 million shares, a more than two year low. Since the peak in October 2013, just about 120 million shares short have been covered. That's a decline of about 47%, a rather significant move. More than 47 million shares have been covered in the last three updates alone, evident in the latest drop seen in the chart above.
As I stated above, Intel rewarded its shareholders with its Q2 earnings report. The company beat on both the top and bottom lines, raised its revenue forecast for the year, announced another $20 billion in share repurchases, and detailed the acceleration of the buyback. This was great news for shareholders, and sent shares higher. Sentiment has certainly improved for Intel in 2014, with short sellers continuing to run away from the chip giant as results have gotten better. This reinforces the notion that investors should stay long the name, and perhaps accumulate more shares on pullbacks. Should Intel finally raise its dividend, you would probably see even more shorts scramble. Short interest for the chip giant has nearly been halved since the 2013 peak, and that's very important. I'll continue to update investors as this story progresses.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.
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.