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Short Interest Update: T-Mobile US Inc (TMUS)

Could TMUS be on track for another run higher?

by 1/15/2014 9:44:15 AM
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A number of securities experienced notable surges in short interest during the most recent reporting period, including silicon wafer manufacturer SunEdison Inc (NYSE:SUNE), social networking site Facebook Inc (NASDAQ:FB), and wireless services provider T-Mobile US Inc (NYSE:TMUS). Here's a quick look at how an unwinding of this skepticism could add more fuel to these overachievers' tanks.

SunEdison Inc (NYSE:SUNE) -- formerly known as MEMC Electronic Materials, Inc -- boasts a whopping year-over-year advance of roughly 290% to wink at the $14.41 level, and reached a new multi-year high of $15.22 on Jan. 9. However, short interest surged to record levels over the latest reporting period, increasing by around 169%, or 27.61 million shares -- the most of any security on the New York Stock Exchange. From a contrarian perspective, SUNE could end up benefiting from a short-covering rally down the road.

Facebook Inc (NASDAQ:FB) has gained about 92% during the past year to perch at $57.74, and trekked to an all-time peak of $58.96 last week. Still, the stock saw the second-largest spike in short interest among Nasdaq components during the latter half of December, with the number of shorted shares closing in on a one-year high. Following this 30.4% jump (the equivalent of 9.72 million shares), FB now ranks 24th on the Nasdaq for total short interest. A mass exodus by these bears could trigger a short-squeeze situation for the equity.

Last but not least, T-Mobile US Inc (NYSE:TMUS) has nearly doubled in value since last May to trade at $32.94, and has outpaced the broader S&P 500 Index (SPX) by more than 25 percentage points during the past two months. Even so, short interest surged by 60.9% over the most recent reporting period, and now accounts for a healthy 4.9% of the security's available float. Should these short sellers abandon their pessimistic positions, it could amplify the stock's upward momentum.

This skepticism toward TMUS is evident in the options pits, as well. In fact, the equity's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.59 ranks in the 88th percentile of its annual range, meaning traders have been picking up puts relative to calls at a faster-than-usual clip in recent months.

In a similar vein, TMUS' Schaeffer's put/call open interest ratio (SOIR) of 0.66 is just 5 percentage points shy of a 52-week peak. In other words, near-term traders have rarely been more put-focused toward the stock during the past year. An unwinding of these put positions could serve as a tailwind over the next few months.

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