Swift Transportation (SWFT US), the transportation and logistics provider, ended Fridays (12/9) trading session down 7.7%, as the company issued an update on full year 2016 guidance, adjusting 1Q & 2Q earnings-per-share lower, to the markets chagrin. The company also indicated it is finding it difficult to provide full year 2017 EPS guidance at the present time.
According to the S3 Short Interest projection, a measure of the real-time relative change in shorting activity, short exposure is trending towards an all-time high, with our current estimate at $728 million. Looking back over the past five years of the stock’s short interest history, short exposure had never eclipsed the $700 million threshold… until now. In fact, short interest is up close to 150% looking back one year ago, when the exchange reported short interest figure on 12/15/2015 was 23.3 million shares at $12.76, equating to $297 million exposure in notional terms. Digging a bit deeper into 2016 data, the largest month-to-month jump in short interest exposure occurred in November, spiking 31%, while the stock price gained 11%. We estimate short interest measured as a percentage of float to now be 37% of shares available for trading.
With approximately three-quarters of borrowable supply currently on loan to shorts, there is still availability for the bears to build positions further, enough that eclipsing $1 billion in short exposure is not out of the question if the latest trend continues. Although the company tried to portray an optimistic outlook for 2017 on the mid-quarter conference call for investors last week, the shorts are betting the road ahead may have some cracks to watch out for.
For more information on the above analysis, please contact:
Matthew Unterman, Director, S3 Partners, LLC
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