Short Sellers Bet Against Generic EpiPen

• Short sellers pounced on this leading pharmacy operator in the most recent period.
• During that time, the company announced the availability of a cheap, generic EpiPen.
• The share price rose modestly between the most recent settlement dates.

The latest data shows that the number of shares sold short in CVS Health Corp CVS soared during the first two weeks of this month. What caught the eye of short sellers? The most prominent news during the period was the company's announcement that it will offer patients a low-cost generic version of the epinephrine injector; that is, a cheap version of the Mylan NV MYL EpiPen.

Between the December 30 and January 13 settlement dates, this Rhode Island-based pharmacy operator saw the number of its shares short surge more than 234 percent to nearly 45.91 million. That was by far the highest level of short interest in the past year, and it represents 4.3 percent of the total float. The average daily trading volume dropped during the period, and the number of days it would take to cover all short positions jumped from less than two to more than seven.

The CVS share price ended the two-week short interest period almost 4 percent higher, though it was up almost 5 percent at one point. The S&P 500 gained less than 2 percent in that time. The stock has pulled back since then almost to where it started the year. The consensus recommendation of analysts polled by Thomson/First Call is to buy shares. The company is expected to report fourth-quarter results in about two weeks.