A Cigna technician delivers a health screening.
Julia Rendleman/Getty Images
Shares of health insurance giant
Cigna
are up 2.6% over the past six months, a period in which the
S&P 500 index
is down 3.3%. But those two figures don’t tell the whole story of the stock’s performance over that period: Over the same period, investors’ short interest in the stock is down 69.4%.
Investors bet against stocks by selling them short, or selling borrowed shares, with the idea the shares can be purchased cheaper at a later date and returned to the lender. A stock’s short interest reflects how many shares have been sold short. When short interest drops, it means that less money is being bet against that stock.
Performance of
Cigna
stock (ticker: CI), at first, seems unexceptional since August; shares have only marginally outperformed the
S&P 500 Health Care sector index,
which is flat over that period. The dramatic drop in Cigna’s short interest, however, seems to tell a more nuanced story: More than any other healthcare stock in the S&P 500, investors have decided it’s not worth betting against Cigna.
Screening for stocks whose short interest has dropped is one way of pinpointing changes in investor sentiment; especially in the sentiment of sophisticated, deep-pocketed players in the market.
To find more of these interesting cases, we screened healthcare stocks the S&P 500 to find those whose short interest had fallen at least 40% over the past six months according to FactSet, as of the close of trading on Monday.
The stocks that passed include some, like
Regeneron Pharmaceuticals
(REGN), that have also seen their share prices rise over the same period, and others, like
Centene
(CNC), that have seen their share prices fall.
Aside from Cigna, Regeneron, and
Centene,
the stocks that passed the screen include
Amgen
(AMGN),
ResMed
(RMD),
PerkinElmer
(PKI),
Universal Health Services
(UHS),
Quest Diagnostics
(DGX), and
DaVita
(DVA).
| Company / Ticker | Recent price | Market value (mil) | Price change (six months) | Six Month change in short interest |
|---|---|---|---|---|
| Cigna / CI | $298.60 | $91,281 | 2.6% | -69.4% |
| Amgen / AMGN | 243.70 | 130,109 | -1.9 | -54.3 |
| ResMed / RMD | 215.20 | 31,616 | -10.3 | -54.0 |
| Regeneron Pharmaceuticals / REGN | 764.00 | 83,184 | 21.5 | -52.5 |
| PerkinElmer / PKI | 138.70 | 17,520 | -12.2 | -51.3 |
| Universal Health Services / UHS | 148.40 | 9,522 | 32.5 | -47.1 |
| Centene / CNC | 73.10 | 41,382 | -24.4 | -45.3 |
| Quest Diagnostics / DGX | 146.30 | 16,658 | 4.1 | -42.7 |
| DaVita / DVA | 83.70 | 7,545 | -9.5 | -41.7 |
Source: FactSet
While shares of the biotech
Amgen
are down 1.9% over the past six months, short interest in the stock is down 54.3%. Shares of
ResMed,
which makes medical devices, are down 10.3%; its short interest is down 54%. It’s not entirely clear why these stocks would have fallen while their short interest also fell.
Hospital operator Universal Health, meanwhile, followed a more-expected pattern. The stock is up 32.5% over the past six months, while its short interest is down 47.1%. Shares of diagnostic-testing provider Quest are up 4.1%; the stock’s short interest is down 42.7%.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
Credit: marketwatch.com