Quantcast

CECE: Insiders vs. Shorts


Shutterstock photo

The most recent short interest data was recently released for the 12/29/2017 settlement date, and CECO Environmental Corp. (Symbol: CECE) is one of the most shorted stocks of the Russell 3000, based on 5.27 "days to cover" versus the median component at 4.65. There are a number of ways to look at short data, but one metric that we find particularly useful is the "days to cover" because it considers both the total shares short and the average daily volume of shares typically traded. The number of shares short is then divided by the average daily volume, to express the total number of trading days it would take to close out all of the open short positions if every share traded represented a short position being closed.

In the case of CECO Environmental Corp. (Symbol: CECE), the total short interest at the 12/29/2017 settlement date was 907,128 shares, which compares to the average daily trading volume of just 172,173 shares, for a "days to cover" ratio of 5.27.

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 CECE share traded represented a short position being closed, then at the average daily volume of 172,173 shares it would only be during the 6th 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 6 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.

CECO Environmental Corp. (Symbol: CECE) 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, CECE has seen 8 different instances of insider buying, as summarized by the table below:

Purchased Insider Title Shares Price/Share Value
08/15/2017 Jason Dezwirek Director 50,000 $7.25 $362,750.00
08/16/2017 Jonathan Pollack Director 6,800 $7.31 $49,708.00
11/09/2017 David B. Liner Director 4,000 $5.76 $23,040.00
11/09/2017 Claudio A. Mannarino Director 2,000 $5.80 $11,600.00
11/09/2017 Dennis Sadlowski Chief Executive Officer 4,000 $5.54 $22,160.00
11/09/2017 Jason Dezwirek Director 50,000 $5.80 $290,000.00
11/09/2017 Valerie Gentile Sachs Director 5,000 $5.49 $27,450.00
11/09/2017 Jonathan Pollack Director 8,900 $5.87 $52,243.00
11/09/2017 Seth Rudin Director 1,000 $5.81 $5,810.00
11/13/2017 Eric Michael Goldberg Director 1,500 $5.68 $8,520.00
12/14/2017 Dennis Sadlowski Chief Executive Officer 4,100 $4.85 $19,885.00

Below is a chart showing the "days to cover" for CECE over time:

Loading+chart++2018+TickerTech.com

And looking at the chart below, CECE's low point in its 52 week range is $4.68 per share, with $13.50 as the 52 week high point - that compares with a last trade of $4.91.

CECO Environmental Corp. Moving Averages Chart

In recent trading, shares of CECO Environmental Corp. (Symbol: CECE) were changing hands at $4.91/share.

Ten Bargains You Can Buy Cheaper Than The Insiders Did ยป

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing
Referenced Symbols: CECE



More from BNK Invest

Subscribe






BNK Invest
Contributor:

BNK Invest

Market News, Investing










Research Brokers before you trade

Want to trade FX?