uploads///Short Interest

Analyzing REITs Using the Short Interest Ratio


Jan. 5 2016, Updated 8:06 a.m. ET

Short interest ratio

Short interest is a measure that denotes the number of shares sold short for a given span of time. Stock exchanges prepare a monthly report on the total amount of short interest in a particular stock. A short interest ratio indicates the number of days it takes for short-sellers to cover their positions.

The industry sentiment is divided when it comes to evaluating the impact of the short interest ratio. Many consider it to be an indicator of bearish sentiment while others believe high short interest ratios are more likely to increase prices in the future when short sellers buy to cover up their positions.

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Winners of the week

The week ended December 31, 2015, saw the iShares US Real Estate ETF (IYR) take a plunge with negative returns of 0.8%. However, a few securities in the fund did perform well. American Campus Community (ACC) and Douglas Emmett (DEI) emerged as the top performers with positive returns of 2.5% and 2.4%, respectively. Healthcare REITs were the top-performing subgroup with Ventas (VTR) and Health Care Realty Trust (HR) ending the week with positive returns of 1.8% and 1.5%, respectively.

ACC saw a shortfall of 698,252 shares, or 15.8%, in short interest, whereas DEI saw a rise of 121,090 shares, or 3.9%, in short interest. The current short interest ratio for ACC and DEI is 4.3% and 3.7%, respectively.

Wall Street analysts seem to be positive on both securities. 53% of analysts hold a positive view for ACC, whereas 47% of analysts hold a positive view for DEI.

The graph above shows the short interest for the top performer of the week, American Campus Community (ACC).


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