BAC Breaks Higher — and Shorts Finally Follow

The most notable development this week is a sharp, single-session spike in short interest. After weeks of the rebuild story losing momentum — as last week's note explicitly flagged — short positions jumped roughly 9% on August 11 alone, taking SI to 102 million shares, or 1.4% of the free float. That one-day move is the largest in the past 30 days and reverses the stagnation that had set in after July 31. At 1.4% of the float, the absolute level remains low and is not a crowded short by any measure. But the pace of the move is worth noting. Borrowing costs have eased in parallel, dropping around 30% on the week to 0.37% — cheap and falling. Availability is effectively unlimited, with nearly 4.7 billion shares available to borrow. Nothing in the lending market signals squeeze pressure. The more plausible read is that some investors are adding hedges against a stock that has run 7% in a month, rather than expressing a fresh directional conviction.

The Street remains constructive. In the past nine days, UBS lifted its target to $70 on August 3, maintaining its Buy. JP Morgan raised its target from $62.50 to $68 on July 29, keeping Overweight. Those two actions, both from bellwether names and both coming after the Q2 earnings print, set the tone: the consensus direction of travel on price targets is clearly upward. The mean analyst target now runs at $68.77, roughly 7.5% above the current price — a reasonable buffer, though tighter than it was a month ago given how much the stock has moved. The P/E runs at 12.7x and price-to-book at 1.52x, both drifting modestly higher over 30 days as the stock re-rates. Factor scores are broadly supportive: the dividend rank sits at the 87th percentile, days-to-cover ranks at the 76th, and EPS surprise at the 69th — all pointing to a well-positioned franchise rather than a speculative bid.

The bull case rests on net interest income momentum. Revenue rose 7.2% year-over-year to $30.3 billion in Q2, with net interest income up 9% to $15.7 billion. Consumer banking net income grew 21% year-over-year. The bear case centres on capital ratios — the CET1 ratio slipped to 11.2% and the supplementary leverage ratio fell 20 basis points to 5.5% — and on macro risks including inflation and credit quality deterioration that could follow if the rate environment shifts. Those concerns have not moved the needle for most analysts yet, but they are the variables that will matter most if the economic backdrop softens.

Berkshire Hathaway remains the standout institutional name, holding 513 million shares at 7.3% of the company, though its last reported position as of March 31 showed a small trim of 3.7 million shares. BlackRock, adding 6.4 million shares in July, and Capital Research, adding 8.5 million, point to index and active managers alike putting fresh capital to work. Insider activity has been routine: CEO Brian Moynihan sold 18,083 shares on July 15 at $61.59, a scheduled plan sale that paired with an award of the same size — the same pattern repeated in May and June. No discretionary buying or unusual selling from management.

The next earnings date is October 14. With Q2 having delivered a 3.5% one-day gain and a further 2.9% over the following five sessions, the market rewarded the last print. The question heading into Q3 results is whether net interest income can sustain its growth trajectory as rate expectations evolve, and whether the capital ratio pressure that concerned the bears begins to widen or stabilise.