IB Net Payout Yields Model

Short Interest Remains Incredibly High At Sears Holdings

Anybody half way following the market this year has to know that Sears Holdings (SHLD) has had a tremendous run this stock. The stock is up over 150% for the year, leading the S&P 500. Oddly though according to the Bloomberg report on Sears remains 2nd in the list of highest short percentage.

The data is only as of Feb 29th so maybe a few shorts covered during last weeks rally.

Another important point is that Bloomberg lists the equity float as 36 million shares. This number could be considerably lower when adding a few mutual funds that control shares unlikely to be sold to the public.

It's possible that most stocks have similar fund holdings so at least the comparison is likely apples to apples giving a great starting point for more research.

From the list below, Sears has an incredible 34% of the float short. This continues to highlight my theory that the large purchase by Chairman Eddie Lampert and the subsequent aggressive moves on monetizing assets has set off the Impossible to Cover theory.

Figure 1 - Largest S&P 500 Short Interest

                              Short Interest   Short Interest  Equity Float 
Ticker  Name                      / Float %     (In mln shrs)   (In mln shrs)
GME     GAMESTOP CORP-A              41.05         54.85        133.62
SHLD    SEARS HOLDINGS               34.34         12.53         36.48
SVU     SUPERVALU INC                33.27         70.09        210.69
RRD     RR DONNELLEY & S             31.29         55.42        177.12
FSLR    FIRST SOLAR INC              31.23         18.60         59.56

The below chart highlights that Sears is now in an overbought situation especially with the RSI printing above 80. Though as a non-chartist I'll still question how a stock can be that overbought if it has just 
returned to the level from October. Don't be surprised by a pause, but the market shouldn't expect a selloff. 

Figure 2 - SHLD Chart

Disclosure: Long SHLD. Please review the disclaimer page for more details. 


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