Shares shorted is a great indicator for changes in the market’s sentiment of a stock.
When short sellers become less pessimistic about a stock, they cover their positions by buying back the stock – this adds buying pressure to an already bullish trend.
We ran a screen on the S&P 500 (SPY) for stocks paying dividend yields above 1% and sustainable payout ratios below 50%. We screened these stocks for those seeing short covering, with significant decreases in shares shorted month-over-month.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month.
(Click chart for more detail)
List sorted by decrease in shares shorted as a percent of share float.
1. Expedia Inc. (EXPE): Operates as an online travel company in the United States and internationally. Market cap of $7.57B. Dividend yield at 1.01%, payout ratio at 16.24%. Shares shorted have decreased from 19.81M to 16.32M month-over-month, a change representing 1.84% of the company's 189.62M share float. The stock has lost 2.64% over the last year.
2. Best Buy Co. Inc. (BBY): Operates as a retailer of consumer electronics, home office products, entertainment products, appliances, and related services primarily in the United States, Europe, Canada, and China. Market cap of $9.63B. Dividend yield at 2.41%, payout ratio at 19.73%. Shares shorted have decreased from 38.17M to 34.13M month-over-month, a change representing 1.39% of the company's 289.71M share float. The stock has had a good month, gaining 16.73%.
3. Wyndham Worldwide Corporation (WYN): Provides various hospitality products and services to individual consumers and business customers in the United States and internationally. Market cap of $5.12B. Dividend yield at 1.81%, payout ratio at 22.27%. Shares shorted have decreased from 5.53M to 3.66M month-over-month, a change representing 1.23% of the company's 152.35M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.9). The stock has had a good month, gaining 17.89%.
4. Total System Services, Inc. (TSS): Provides electronic payment processing and other services to card-issuing and merchant acquiring institutions. Market cap of $3.81B. Dividend yield at 2.03%, payout ratio at 26.13%. Shares shorted have decreased from 4.15M to 2.17M month-over-month, a change representing 1.08% of the company's 182.57M share float. Exhibiting strong upside momentum--currently trading 6.37% above its SMA20, 11.49% above its SMA50, and 12.36% above its SMA200. The stock has had a good month, gaining 13.31%.
*Short data sourced from Yahoo! Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.