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Short Interest Update: Fifth Third Bancorp (FITB)

Why additional upside could be in the cards for FITB

by 12/27/2013 9:50:17 AM
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A bevy of stocks saw significant jumps in short interest during the latest reporting period, including concert producer Live Nation Entertainment, Inc. (NYSE:LYV), online media firm SINA Corp (NASDAQ:SINA), and banking concern Fifth Third Bancorp (NASDAQ:FITB). Here's a brief overview of how an unwinding of this pessimism could serve as a contrarian tailwind for these outperformers.

Live Nation Entertainment, Inc. (NYSE:LYV) has been on a technical tear in 2013, gaining nearly 113% year-to-date to trade at $19.81, and tagging a six-year high of $19.93 during yesterday's session. Nevertheless, short interest surged by 41.7% during the most recent reporting period, and accounts for a healthy 3.5% of the equity's available float. With 4.8 million shares currently sold short -- the most since early August -- LYV could end up benefiting from a wave of future short-covering activity.

SINA Corp (NASDAQ:SINA) has also been a standout on the technical front, advancing more than 69% on a year-over-year basis to perch at $80.17, and besting the broader S&P 500 Index (SPX) by nearly 40 percentage points during this same time frame. Still, SINA saw a 24.6% surge in short interest during the first half of December, which now makes up a notable 7.3% of the security's float. Should the stock keep adding to its overall gains, it could trigger a short-squeeze situation down the road.

Finally, Fifth Third Bancorp (NASDAQ:FITB) has advanced roughly 39% during the past 52 weeks, and reached a five-year peak of $21.14 on Thursday. However, short interest soared by 90% during the latest reporting period, and by a whopping 233% over the last two reporting periods. It would take close to five sessions to cover these bearish bets, at the stock's average daily trading volume. A mass exodus by these skeptics could potentially add more fuel to FITB's fire.

Elsewhere, the security's Schaeffer's put/call open interest ratio (SOIR) checks in at 4.35, signaling puts more than quadruple calls among options due to expire within the next three months. In fact, this ratio sits at a 12-month peak, meaning near-term traders are more put-focused toward FITB now than at any other time during the past year. An unwinding of these put positions -- particularly at out-of-the-money strikes -- could end up giving the shares an additional boost.

Also of note, only eight out of the 20 covering analysts have deemed Fifth Third Bancorp (NASDAQ:FITB) worthy of a "buy" or better endorsement, compared to 11 "holds" and one "strong sell" suggestion. In addition, the stock's average 12-month price target of $21.16 denotes expected upside of just 1.1% to yesterday's closing price of $20.92. This leaves plenty of room for a round of upgrades and/or price-target hikes, which could amplify the equity's upward momentum.


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