Bank of America enters the final stretch before its October 14 earnings with short interest that has stopped falling — a subtle shift from the aggressive unwind that dominated the narrative five days ago.
The prior note flagged a dramatic short-interest retreat from peak levels near 105 million shares in late August to roughly 84 million by early September. That unwind has now stalled. Short interest has edged back up roughly 2.8% on the week to 83.2 million shares — 1.14% of the free float — after dipping as low as 82.8 million on September 9. It is a modest reversal, not a new build, but it is enough to say the covering wave has run its course for now. With October 14 approaching, the pattern from Q2 is worth keeping in mind: shorts rebuilt into that report before the 3.5% one-day gain forced another round of covering. The setup is beginning to rhyme.
The lending market signals no stress whatsoever. Borrow availability is essentially unlimited — the reading is capped at the data ceiling — with over 5 billion shares available to lend against a short book of 83 million. Cost to borrow has ticked up roughly 39% on the week, but the absolute level of 0.38% remains trivially cheap. There is no friction for anyone wanting to build or cover a short position. Options positioning is mildly more cautious than usual: the put/call ratio of 1.22 is a touch above its 20-day average of 1.20, with a z-score of just 0.5 — well inside normal bounds. Defensive hedging exists but is not elevated. Overall, the positioning picture is dormant rather than charged.
The Street remains constructively aligned, with the consensus mean target near $69 against a current price of $62.69 — roughly 10% implied upside. The most recent analyst action of note was UBS lifting its target to $70 in early August while maintaining Buy. The broader wave of target raises following the Q2 print — from JPMorgan, Barclays, Wells Fargo, KBW and others — has not been meaningfully walked back, which speaks to confidence in the earnings trajectory. The bull case rests on 9% net interest income growth and 21% year-on-year consumer banking net income growth. The bear case centres on a CET1 ratio that fell to 11.2% and a supplementary leverage ratio down to 5.5%, raising questions about capital flexibility heading into a potentially tougher macro backdrop. At 12.3x trailing earnings and 1.47x book, the stock is not pricing in much optimism — which cuts both ways.
The ownership register carries one notable data point. Berkshire Hathaway's last disclosed position — 483 million shares, or 6.9% of the company — showed a reduction of 30 million shares as of June 30. Warren Buffett's 13G filing from November 2025 reflected a stake of 7.8%, down from 8.9% previously. The direction of travel is clear even if the current level is unknown, since holders dropping below 5% need not file again. Whether that selling has continued, paused, or reversed is not disclosed. It is the most structurally interesting ownership question hanging over the stock.
Peers have drifted lower on the week. JPM fell 1.6%, TFC dropped 2.3%, and USB slipped 1.1%, while BAC held almost flat with a 0.02% weekly gain — a repeat of the relative resilience flagged in earlier notes. The divergence is modest but consistent.
The next meaningful data point is October 14. With shorts stabilised rather than building, options calm, and the Street's target prices unchanged since Q2, what matters now is whether the Q3 print can extend the net interest income trajectory — and whether the CET1 ratio has stopped compressing.
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