CAH shorts build ahead of Thursday earnings

Three positioning signals have converged on Cardinal Health in the same week its quarterly earnings are due on October 30.

Short interest climbed 10.5% in a single session on October 26, reaching 3.26% of free float, the highest level in recent weeks, with 7.75 million shares short. Over the past month the position has grown 15.7%. The move is modest in absolute terms, but the pace of accumulation stands out given that the stock has already gained 14% over the past month.

Put demand joins the signal

Options markets have been moving in the same direction. The put/call ratio stood at 0.74 on October 23, running 2.4 standard deviations above its 20-day mean of 0.66. By October 26 it had eased to 0.696 but remained above its recent baseline. The 52-week range for the ratio runs from 0.51 to 1.01, so the current reading sits in the upper portion of that band without being extreme.

The cost to borrow also ticked higher earlier in the week, rising 58% in seven days to 0.37% before pulling back slightly. At that level it remains firmly in the low category. Availability is extremely wide at 9,640%, meaning shares are plentiful to borrow relative to the current short position. There is no squeeze pressure here; the borrow market is essentially open.

Context: analysts still constructive

The positioning shift contrasts with the analyst picture. Mizuho raised its target to $280 on October 20, and UBS moved to $295 the week before. Both maintained positive ratings. The consensus target sits at $273, roughly 9% above the current price of $251.54. That analyst backdrop is covered in more detail in the earnings preview published earlier today.

Wellington Management filed a 13G disclosing a 6.3% stake as of August. BlackRock holds 11.4% as of September 30 and added nearly 462,000 shares in the most recent period. These are passive positions, but the scale underlines how heavily indexed the register is into a stock where incremental short positioning can move the float percentage visibly.

Data summary

• Short interest: 3.26% of free float, up 10.5% in one day and 15.7% over the past month
• Shares short: 7.75 million (FINRA fortnightly: 7.68 million as of October 15)
• Put/call ratio: 0.696 on October 26, 20-day mean 0.667, 52-week range 0.51 to 1.01
• Cost to borrow: 0.36%, low level; availability 9,640%, extremely loose
• Stock up 14% over the past month; down 0.4% over the past week
• Next earnings: October 30