The short interest ratio of a stock means the number of shares sold short by investors, divided by the total number of floating shares of that stock. This is also an important measure of investor sentiment, as a high short ratio implies that investors expect the stock price to decline. On the other hand, a sharp decline in the short ratio of a stock means that short sellers expect the stock price to increase in the near future, which could mean they’ve abandoned their bearish thesis.
In this article, we’ll look at four major stocks and one ETF which saw a major decline in their short interest ratio ahead of the elections. Those stocks are Procter & Gamble Corporation (NYSE:PG), Barracuda Networks Inc. (NYSE:CUDA), JetBlue Airways Corporation (NASDAQ:JBLU), and BJ’s Restaurants, Inc. (NASDAQ:BJRI), while the ETF is the Vanguard MSCI EAFE ETF (NYSEARCA:VEA).
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Procter & Gamble Corporation (NYSE:PG) is one of the world’s largest consumer product companies with over 100 manufacturing sites in approximately 40 countries, and owns some of the best-known consumer brands such as such as Olay, Old Spice, Safeguard, Head & Shoulders, Pantene, and Charmin. The short interest in the company’s shares fell sharply in the second-half of October, by 63% to total just 1.3% of the float. It fell by another 6.7% in the first-half of November to cover just 32.50 million shares, or 1.2% of the float. Shares of PG have returned over 13% in the last year. The company reported better-than-expected fiscal first-quarter results recently, including net profits of $1.03 per share, compared to analysts’ expectations of $0.98. It also reported a 3% growth in organic sales, beating the 2% increase expected by the market. Procter & Gamble Corporation (NYSE:PG) is nearing the end of its restructuring program in which it has sold off many non-essential brands and products and has now started another $10 billion cost-cutting program. 71 hedge funds in our system held $20.09 billion worth of PG shares at the end of September, with the value of their holdings increasing by a whopping 263% quarter-over-quarter as several hedge funds initiated billion-dollar positions in the stock during Q3.
The short interest in Barracuda Networks Inc. (NYSE:CUDA) fell sharply in the second-half of October, by 35%, followed by a 13% decline in the first-half of November. Just 806,792 shares are short now, or 2.7% of the float. The stock is currently trading fairly close to its 52-week high of $26.60. Barracuda Networks Inc. (NYSE:CUDA) has a total market capitalization of $1.3 billion, with institutions owning 61% of the outstanding shares of the company. The technology company provides security and data protection solutions, with its security solutions including Barracuda Email Security, The Barracuda Web Security Gateway, Barracuda NextGen Firewalls, and Barracuda Web Application Firewall. The value of hedge funds’ holdings in the stock declined by almost 18% to $55 million quarter-over-quarter by the end of the third quarter, despite shares of the company soaring by over 60% during the quarter, so a lot of hedge funds appear to have taken the money and run.
We’ll check out three more stocks with falling short interest on the next page.