Shorts Holding Steady in Health Care Sector
Author:
Ihor Dusaniwsky
Managing Director of Predictive Analytics, S3 Partners
Matthew Unterman
Director of Predictive Analytics, S3 Partners
July and August saw worldwide equity short interest dip -$93.4 billion, or -7%. This decline was made up of $55.7 billion of short covering coupled with a $37.7 billion decline in the value of the stocks shorted. Short sellers were trimming positions even though their positions have been profitable over the last six weeks, up +$27.4 billion, +1.9% on an average worldwide equity short interest of $1.41 trillion.The Consumer Discretionary and Industrial sectors had the largest increase in short covering and the Health Care Sector had the smallest amount of short covering, while the Materials Sector had increased short selling.
Sector (in $mm’s)
6/30 Short Interest
8/17 Short Interest
Change Short Interest
Change Shares Shorted
Communication Services
$91,879
$84,710
($7,169)
($5,198)
Consumer Discretionary
$221,090
$200,687
($20,403)
($14,452)
Consumer Staples
$76,329
$73,348
($2,982)
($2,070)
Energy
$87,673
$91,460
$3,786
($2,178)
Financials
$186,536
$175,861
($10,676)
($9,418)
Health Care
$156,403
$147,976
($8,427)
($465)
Industrials
$186,301
$167,907
($18,395)
($12,348)
Information Technology
$233,339
$210,968
($22,371)
($8,512)
Materials
$83,783
$82,440
($1,343)
$977
Misc. (SPACs)
$56
$70
$14
$10
Real Estate
$56,175
$53,529
($2,646)
($1,124)
Utilities
$34,856
$32,093
($2,762)
($892)
Grand Total
$1,414,421
$1,321,048
($93,374)
($55,669)
While there was a comparatively small amount of short covering in the Health Care sector, $465 million, there was a clear delineation between its two industry groups, Health Care Equipment & Services and Pharmaceuticals, Biotechnology & Life Sciences.
Industry Group
6/30 Short Interest
8/17 Short Interest
Change Short Interest
Change Shs Shorted
Health Care Equipment & Services
$59,619
$53,513
($6,106)
($1,188)
Pharma, Biotech & Life Sciences
$96,785
$94,464
($2,321)
$724
Grand Total
$156,403
$147,976
($8,427)
($465)
Short sellers were trimming exposure in the Health Care, Equipment & Services Industry Group even as they were up +8.0% in the third quarter while adding to their exposure in the Pharma, Biotech & Life Sciences Industry Group despite being up only 2.0% for the third quarter. Short sellers are expecting the Health Care, Equipment & Services Industry Group downward stock price trend to lessen while the Pharma, Biotech & Life Sciences Industry Group has more room to continue its downwards stock price trend.
Health Care, Equipment & Services stocks with the largest increase in third quarter short selling:
Health Care Equipment & Services (in $mm’s)
Ticker
6/30 Short Interest
8/17 Short Interest
Change Short Interest
Change Shares Shorted
HUMANA INC
HUM US
$971
$1,485
$514
$424
DEXCOM INC
DXCM US
$1,595
$1,592
($3)
$254
BECKTON DICKENSON & CO
BDX US
$536
$790
$254
$231
IDEXX LABORATORIES INC
IDXX US
$1,147
$1,256
$108
$144
TERUMO CORP
4543 JP
$155
$283
$128
$144
VEEVA SYSTEMS INC
VEEV US
$635
$731
$97
$129
MASIMO CORP
MASI US
$419
$407
($12)
$124
HOYA CORP
7741 JP
$157
$244
$87
$103
CVS HEALTH CORP
CVS US
$1,227
$1,281
$54
$95
KONINKLIJKE PHILIPS NV
PHIA NA
$348
$456
$108
$94
Health Care, Equipment & Services stocks with the largest increase in third quarter short covering:
Health Care Equipment & Services (in $mm’s)
Ticker
6/30 Short Interest
8/17 Short Interest
Change Short Interest
Change Shares Shorted
ESSILORLUXOTTICA
EL FP
$1,027
$663
($364)
($374)
STRYKER CORP
SYK US
$1,146
$821
($325)
($223)
PENUMBRA INC
PEN US
$1,209
$674
($534)
($221)
CIGNA GROUP
CI US
$921
$685
($236)
($202)
ALLIGN TECHNOLOGY INC
ALGN US
$967
$776
($191)
($179)
MOLINA HEALTHCARE INC
MOH US
$706
$548
($158)
($178)
CARDINAL HEALTH INC
CAH US
$764
$542
($222)
($156)
ABBOTT LARORATORIES
ABT US
$1,441
$1,267
($174)
($120)
ACADIA HEALTHCARE CO INC
ACHC US
$363
$225
($138)
($117)
FRESENIUS MEDICAL CARE AG
FME GR
$859
$783
($76)
($106)
Pharmaceutical, Biotechnology & Life Sciences stocks with the largest increase in third quarter short selling:
Pharma, Biotech & Life Sciences (in $mm’s)
Ticker
6/30 Short Interest
8/17 Short Interest
Change Short Interest
Change Shares Shorted
JOHNSON & JOHNSON
JNJ US
$2,149
$5,246
$3,097
$2,986
ROCHE HOLDING AG
ROG SW
$127
$480
$354
$357
BIOGEN INC
BIIB US
$591
$892
$302
$350
DANAHER CORP
DHR US
$952
$1,324
$372
$321
WUXI APPTEC CO LTD
2359 HK
$213
$590
$377
$304
EISAI CO LTD
4523 JP
$97
$330
$233
$238
ZOETIS INC
ZTS US
$423
$683
$260
$234
SARTORIUS AG
SRT3 GR
$935
$1,309
$374
$220
REGENERON PHARMACEUTICALS
REGN US
$779
$1,078
$299
$215
HORIZON THERAPEUTICS PLC
HZNP US
$660
$873
$214
$208
Pharmaceutical, Biotechnology & Life Sciences stocks with the largest increase in third quarter short covering:
Pharma, Biotech & Life Sciences (in $mm’s)
Ticker
6/30 Short Interest
8/17 Short Interest
Change Short Interest
Change Shares Shorted
SANOFI
SAN FP
$3,996
$2,653
($1,343)
($1,334)
PFIZER INC
PFE US
$2,183
$1,609
($573)
($563)
CHUGAI PHARMACEUTICAL CO
4519 JP
$655
$237
($418)
($442)
ELI LILLY & CO
LLY US
$2,456
$2,466
$10
($349)
BAYER AG
BAYN GR
$980
$650
($330)
($346)
OTSUKA HOLDINGS CO LTD
4578 JP
$504
$225
($279)
($296)
MERCK & CO INC
MRK US
$1,945
$1,552
($394)
($285)
ARGENX SE ADR
ARGX US
$488
$363
($125)
($254)
NOVO NORDISK A/S ADR
NVO US
$366
$224
($142)
($194)
MODERNA INC
MRNA US
$2,134
$1,679
($455)
($187)
Shorting the Health Care sector has been a very profitable trade relative to the rest of the market. Overall short sellers are up only +1.9% for the quarter with the Utilities taking the top spot in the league standings with a +5.24% return, Information Technology coming in second at +5.17% and Health care taking third place with a +4.27% quarterly return.
The most profitable Health Care Sector shorts in the third quarter are:
Most Profitable 3rd Quarter Shorts
Ticker
Avg Short Interest
3rd Quarter P\L
Total P\L %
APELLIS PHARMACEUTICALS INC
APLS US
$483
$571
118.30%
TG THERAPEUTICS
TGTX US
$411
$327
79.50%
DEXCOM INC
DXCM US
$1,708
$308
18.03%
PENUMBRA INC
PEN US
$891
$257
28.86%
MODERNA INC
MRNA US
$1,852
$231
12.46%
INSULET CORP
PODD US
$747
$216
28.92%
SAGE THERAPEUTICS INC
SAGE US
$235
$184
78.06%
EDWARDS LIFESCIENCES
EW US
$836
$167
19.96%
DOXIMITY INC
DOCS US
$477
$163
34.17%
INTUITIVE SURGICAL INC
ISRG US
$995
$158
15.88%
The least profitable Health Care Sector shorts in the third quarter are:
Least Profitable 3rd Quarter Shorts
Ticker
Avg Short Interest
3rd Quarter P\L
Total P\L %
ELI LILLY & CO
LLY US
$2,330
($314)
-13.49%
AMGEN INC
AMGN US
$1,617
($281)
-17.37%
REATA PHARMACEUTICALS
RETA US
$531
($262)
-49.43%
SARTORIUS AG-VORZUG
SRT3 GR
$1,136
($171)
-15.09%
BRIDGEBIO PHARMA INC
BBIO US
$395
($171)
-43.19%
JOHNSON & JOHNSON
JNJ US
$3,183
($168)
-5.29%
ARGENX SE ADR
ARGX US
$454
($161)
-35.52%
ABBVIE INC
ABBV US
$1,509
($153)
-10.16%
HUMANA INC
HUM US
$1,319
($137)
-10.39%
CORCEPT THERAPEUTICS INC
CORT US
$393
($126)
-32.10%
Health Care short interest has been steadily declining since it hit its 2023 high of $162 billion in mid-April. But shares shorted had been increasing until mid-July with short sellers backing up their profitable bets. Since mid-July we’ve seen net short covering in the sector, but it consisted of short covering in the Health Care, Equipment & Services industry group partially offset with short selling in the Pharma, Biotech & Life Sciences industry group.
If the trend continues, we should see increased short selling in Pharma and Biotech as short sellers look for continued price weakness in the group.
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