In the case of Clearfield Inc (CLFD), the total short interest at the 03/31/2016 settlement date was 1,545,304 shares, which compares to the average daily trading volume of just 51,350 shares, for a "days to cover" ratio of 30.09.
When short sellers eventually cover their positions, by definition there must be buying activity because a share that is currently sold short must be purchased to be covered. At the present levels of short interest, if from this point forward every single CLFD share traded represented a short position being closed, then at the average daily volume of 51,350 shares it would only be during the 31st trading day that every short position would be closed.
So it would stand to reason that should some unexpectedly good news come out, and short sellers did not have 31 days of patience but instead wanted to cover their short positions very suddenly, that situation could result in sending the stock higher until the higher price produces enough sellers to generate the necessary volume to close out those positions quickly.
Clearfield Inc (CLFD) has something relatively rare for a stock with this much short interest, that being insiders taking the other side of the trade. Looking back over the trailing six month period, CLFD has seen 2 different instances of insider buying, as summarized by the table below:
Purchased | Insider | Title | Shares | Price/Share | Value |
---|---|---|---|---|---|
11/30/2015 | Ronald G. Roth | Director | 10,000 | $13.60 | $136,000.00 |
02/05/2016 | Ronald G. Roth | Director | 5,000 | $13.56 | $67,800.00 |
02/03/2016 | Patrick Goepel | Director | 1,000 | $14.07 | $14,070.00 |
05/03/2016 | Patrick Goepel | Director | 1,250 | $18.60 | $23,250.00 |
05/13/2016 | Ronald G. Roth | Director | 5,000 | $17.60 | $88,000.00 |
Below is a chart showing the "days to cover" for CLFD over time:
And looking at the chart below, CLFD's low point in its 52 week range is $11.59 per share, with $20.28 as the 52 week high point — that compares with a last trade of $17.19.
In recent trading, shares of Clearfield Inc (CLFD) were changing hands at $17.19/share.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.