Five Stocks With Falling Short Interest

As a general rule, “short” shares are borrowed and then sold in anticipation that the share price will decrease before the amount of borrowed shares has to be purchased and returned the party loaning shares. Meanwhile, short interest represents the total number of shares of a particular company’s stock that have been sold short but not yet covered. Hence, the so-called short interest is used by most investors as a market-sentiment indicator.

A high level of short interest could mean that a company’s share price is anticipated to fall in the near-term future, so large increases or decreases in a stock’s short interest usually represent important gauges of investor sentiment. Having this in mind, let’s have a look at five stocks that registered a significant decrease in short interest in the second half of June. We will also discuss the hedge fund sentiment towards those five stocks in an attempt to find out what the hedge fund industry thought about the five stocks in the first quarter.

At Insider Monkey, we track around 770 hedge funds and other institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details).

#5. Universal Technical Institute Inc. (NYSE:UTI)

– Change in short interest in the period of June 15-June 30: -77.4%

– Investors with long positions as of March 31: 9

– Aggregate value of investors’ holdings as of March 31: $40.66 Million

The most recent short interest data show a 77% decrease in short interest for Universal Technical Institute Inc. (NYSE:UTI) to 210,125 shares. There were nine hedge fund vehicles followed by Insider Monkey with long positions in the provider of post-secondary education at the end of the March quarter, as compared to 11 registered at the end of the December quarter. The overall value of those long positions fell by 3% quarter-over-quarter to $40.66 million. The nine hedge funds amassed 39% of the company’s outstanding common stock. In early June, UTI’s boardroom voted to eliminate the quarterly cash dividend previously paid to shareholders. The last quarterly dividend payment amounted to $0.02 per share. Lower student population levels and fewer student starts led to a 9% decline in the company’s average undergraduate full-time student enrollment in the first quarter to roughly 12,200 students. UTI’s stock is down 43% year-to-date. Alexander Medina Seaver’s Stadium Capital Management owned 3.61 million shares of Universal Technical Institute Inc. (NYSE:UTI) at the end of March.

#4. Everi Holdings Inc. (NYSE:EVRI)

– Change in short interest in the period of June 15-June 30: -78.3%

– Investors with long positions as of March 31: 12

– Aggregate value of investors’ holdings as of March 31: $19.70 Million

The number of Everi Holdings Inc. (NYSE:EVRI) shares short decreased by 2.64 million in the second half of June to 730,007. Everi lost some love from the hedge funds tracked by our team during the first quarter of 2016, as the number of funds with stakes in the company dropped to 12 from 15 quarter-on-quarter. The overall value of those stakes fell by 73% quarter-over-quarter to $19.70 million. Roughly 13% of the company’s outstanding shares were hoarded up by the hedge funds monitored by Insider Monkey. The provider of slot machines and other gaming equipment to casinos has seen the value of its stock plunge by 62% so far in 2016. Everi Holdings posted total revenues of $205.77 million for the first three months of 2016, down 1% year-over-year. D.E. Shaw & Co. L.P., founded by David E. Shaw, had 1.44 million shares of Everi Holdings Inc. (NYSE:EVRI) among its holdings on March 31.

Let’s head to the second page of this article, where we will discuss the hedge fund sentiment towards three other stocks that saw a decrease short interest in the second half of June.

#3. Civeo Corporation (Canada) (NYSE:CVEO)

– Change in short interest in the period of June 15-June 30: -78.6%

– Investors with long positions as of March 31: 15

– Aggregate value of investors’ holdings as of March 31: $29.89 Million

The number of shares short in Civeo Corporation (Canada) (NYSE:CVEO) decreased by 3.18 million to approximately 866,000 on the settlement date of June 30. Meanwhile, the number of asset managers followed by Insider Monkey with equity investments in Civeo remained unchanged at 15 during the first three months of 2016, whereas the aggregate value of those investments fell by 15% quarter-on-quarter to $29.89 million. The 15 asset managers invested in Civeo on March 31 accumulated nearly 21% of the company’s total number of outstanding shares. The shares of the Houston-based provider of workforce accommodations to the natural resource industry in Canada, Australia and the U.S. are up 20% since the start of 2016. Expectedly, demand for Civeo Corporations’ services are mainly tied to the outlook for crude oil and met coal prices. Roughly 80% of the company’s rooms in Australia are located in the Bowen Basin and serve met coal mines in the region. Jim Simons’ Renaissance Technologies was the owner of 5.73 million shares of Civeo Corporation (Canada) (NYSE:CVEO) at the end of the first quarter.

#2. Atkore International Group Inc. (NYSE:NYSE:ATKR)

– Change in short interest in the period of June 15-June 30: -80.8%

– Investors with long positions as of March 31: no data

– Aggregate value of investors’ holdings as of March 31: no data

On June 30, Atkore International Group Inc. (NYSE:ATKR)’s short interest as a percentage of its float was 2.9%. Atkore’s short interest decreased by 80.8% during the second half of June to 348,356. The marker of electrical raceway products for the non-residential and renovation markets recently went public by selling 12 million shares at an IPO price of $16 a share, significantly below the range of $20-to-$22 the company targeted in its regulatory filings. Private equity firm Clayton, Dubilier & Rice LLC, the owner of the maker of electrical circuitry products, will control a majority of the company’s 62.46 million outstanding shares. The company did not receive any proceeds from the public offering. Atkore International operates in a $13 billion subset of the $78 billion U.S. electrical products market, with the company having an 8% share of this $13 billion-market. The company’s existing product offering addresses roughly $4 billion of the total market opportunity.

#1. Accuride Corporation (NYSE:ACW)

– Change in short interest in the period of June 15-June 30: -83.9%

– Investors with long positions as of March 31: 11

– Aggregate value of investors’ holdings as of March 31: $16.70 Million

Accuride Corporation (NYSE:ACW)’s short interest plunged by nearly 84% during the second half of June to 260,908 shares. As for the hedge fund sentiment, the number of asset managers from our system with stakes in the company fell to 11 from 13 during the first quarter, while the overall value of those stakes decreased to $16.70 million from $18.64 million quarter-on-quarter. Those 11 money managers hoarded up almost 23% of the company’s outstanding common stock. The manufacturer and supplier of commercial vehicle components has seen its market capitalization decrease by 22% since the start of the year. Accuride reported net sales of $160.94 million for the first three months of 2016, which decreased by 12.4% year-on-year. The decrease was mainly driven by continued softness in demand at the company’s Brillion business unit, pricing related to the pass-through of lower raw material costs, as well as lower demand in North American wheels. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors owned 745,212 shares of Accuride Corporation (NYSE:ACW) at the end of March.

Disclosure: None