National Bank of Canada reported Q2 2026 results today — earnings per share beat expectations by $0.07, net income rose from a year ago, and the bank lifted its quarterly dividend to $1.32 per share. The same week, short sellers have been unwinding positions built up over the past month. That contrast is the story heading into summer.
Short interest has been elevated and, until recently, climbing. It peaked near 10.1% of free float on May 11 before pulling back to 8.5% by May 26 — still a meaningful level for a major Canadian bank, but the directional shift matters. The drop of roughly 1.6 percentage points in two weeks is consistent with shorts covering ahead of and after a cleaner-than-feared earnings print. Borrow costs remain low at 0.82%, up about a third on the week but still well inside 1% — not a level that signals any squeeze dynamic. Availability is exceptionally loose, running above 6,700% of short interest, meaning the lending pool is barely touched relative to the positions outstanding. This is a bank where shorting remains cheap and accessible.
The earnings beat adds weight to a factor profile that has been quietly improving. Forward EPS momentum ranks in the 84th percentile on a 90-day basis, and the 12-month forward EPS growth estimate ranks in the 90th percentile across the universe. The dividend score sits at 76 — and today's hike to $1.32 per quarter reinforces that read. The short score of 29.6 remains in moderate territory, ranking in the 70th percentile, which reflects the elevated SI level rather than any extreme positioning. Analyst coverage is thin in the snapshot — only two ratings on record, both cautious — but given the data is as of May 21 and no recent changes are logged, the Street's formal posture on this name may simply be under-covered rather than actively bearish.
Peers had a broadly positive week. TD gained 4.8%, BMO rose 5.5%, and BNS added 4.4%. National Bank itself was up 2.6% on the week, a fraction behind the pack on a relative basis — but all five major Canadian banks reported or are reporting Q2 results this week, and the sector tone has been constructive. BMO and Scotiabank also beat estimates. The dividend hikes across the group signal collective management confidence in capital adequacy heading into the second half.
One institutional note worth flagging: Capital Research and Management Company added nearly 1.5 million shares in Q1 2026, lifting its stake to roughly 1.4% of outstanding shares. FMR (Fidelity) added around 391,000 shares in the same period. BlackRock added a smaller 336,000 shares in April. These are not aggressive moves, but the direction is consistently additive — a quiet accumulation pattern running counter to the elevated short interest that built through April and early May.
The next catalyst is the Q3 earnings date, currently flagged for August 26. Between now and then, the pace of short interest normalisation — whether the 8.5% float figure continues to compress toward the 6-7% range that prevailed before April — will be worth watching alongside any shift in the Canadian rate and credit environment that underpins the bank's net interest margin story.
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