Saturday, May 11, 2019

(AAPL): Update on Apple's Short Interest for 4/30/19

The number of Apple shares sold short declined 8.3M to 52.7M as of 4/30/19. Apple's short interest had been averaging around 40M shares until 2/28 when it spiked to almost 97M, increasing 56.9M in a two week period. This was a result from Apple's accelerated share repurchase program (ASR) that kicked off in February. I discussed the ASR and short interest back in March. Now that Apple reported Q2 results and filed its 10-Q, we have confirmation of the ASR and details of its size.

55M shares were delivered to and retired by Apple. This roughly lines up with the 56.9M share increase in short interest for 2/28/19. Since then, short interest has fallen by 44.2M shares. 

If we assume this was entirely due to the banks covering their short positions related to the ASR, then there would still be over 10M AAPL shares remaining to be bought as of 4/30. Of course, the short selling and covering is not solely on the part of the banks handling the ASR. 

If you think short selling was increasing, then the amount of shares covered for the ASR were more than 44.2M. If others were covering their short positions too, then the amount purchased for the ASR was less than 44.2M. 

In any respect, it appears that the initial delivery of shares was only 80% of the $12B purchase commitment, thus there will be more shares repurchased beyond the 55M. It's hard to know just how many more shares since the price of AAPL has run up, but could be as much as 10M more. The program is set to expire in August. 

The (possibly) 20M shares remaining for the ASR and Apple's own open market repurchases should continue to help support the AAPL's share price.

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