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Short Sellers Flock to Chemicals, Flee From REITs

During the latest reporting period, short interest levels exploded on chemical stocks like Dow Chemical Co (DOW), but fell off on real estate names

Oct 12, 2015 at 3:07 PM
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If short interest numbers are any indication, bears have been taking an active interest in chemical stocks, while souring on a number of real estate names. Here's a look at a few equities that saw dramatic swings in short interest -- to both the upside and downside -- during the latest reporting period.

Dow Chemical Co (NYSE:DOW) saw short interest spike 62% in the most recent reporting period. In fact, going out two reporting periods, short interest levels nearly quadrupled. At present, 7.5% of the stock's float is sold short, which would take over four sessions to cover, at typical volumes.

The surge in bearish attention is curious, given DOW's recent gains. Specifically, since touching a two-year low of $35.11 in late August, the shares have tacked on close to 34% to trade at $46.94.

Meanwhile, short interest on Mosaic Co (NYSE:MOS) and Potash Corporation of Saskatchewan (USA) (NYSE:POT) jumped 49% and 33.4%, respectively, during the most recent two-week reporting period. However, at each stock's typical daily trading levels, it would take less than two days to buy back these bearish bets.

Both securities have warranted the negative attention. MOS is down 2.6% today at $33.05, bringing its year-to-date loss to 27.6%. The shares have also run headlong into their 20-day moving average, which has served as resistance since mid-July. Similarly, POT has plummeted 39.3% in 2015 to trade at $21.45, and hasn't finished above its 20-day trendline in nearly a month.

While short interest has been ramping up on chemical stocks, the opposite is true of real estate investment trusts (REITs). Among the top 10 biggest short interest decreases -- measuring stocks that trade at least a million shares a day -- "real estate" accounts for half.

For instance, Rayonier Inc. (NYSE:RYN) short interest fell over 39% during the latest reporting period, and now represents less than 3% of the stock's total float. It's curious that these bears are jumping ship, though, considering RYN has lost nearly 14% to trade at $22.84, since its most recent peak of $26.49 in early July.

Finally, Realogy Holdings Corp (NYSE:RLGY) is up 1% this afternoon at $39.32, but is being contained by its overhead 32-day moving average. Longer term, the stock has given back 11.6% year-to-date. Nonetheless, short interest fell 35.5% during the latest reporting period, and now accounts for just 1.8% of RLGY's total float.
 

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