Since June this year, Walt Disney (NYSE:DIS) has consistently ranked among the five most shorted stocks on the Dow Jones (DIA). Although Walt Disney’s Days to Cover has fallen from 8.55 a month ago to 5.39 currently, it’s still much higher than the average reading of 3.68 across all Dow components. A high days to cover reading for Disney stock implies that traders are using Disney stock to hedge a long bet elsewhere or that investors believe the stock will decline.

From all the pessimism surrounding Walt Disney, it’s more likely that traders have been betting that Disney stock was going to decline pretty dramatically. A lot of the pessimism is linked to subscriber loss by ESPN, Disney’s biggest cash cow bringing in one third of the company’s revenue and 39% of operating income. Disney reported during its latest earnings release that ESPN subscribers had fallen to 92 million, which in effect means the channel has lost a staggering 7 million subscribers over the past two years alone.

Interestingly, Disney shares have fallen just 1% over the past one month, which perhaps explains why the shorts have been covering.

Walt Disney 1-Month Share Returns

Source: CNN Money

Of course it’s possible to make money from price declines as small as that. But I believe that it’s far easier to just long Walt Disney, the pessimism surrounding ESPN notwithstanding. Despite its ups and downs, Disney shares are up 13% over the past 3 months; up 3.8% over a 6-month period, and up 21.3% YTD.

Yet the shorts have been unrelenting. Doug Kass of The Street says that Walt Disney remains on his Best Short Ideas list. Other than the usual worries about ESPN, Kass says that Walt Disney’s theme parks could begin to suffer from demand elasticity after a long runup of ticket price increases. Kass goes on to add that after averaging EPS growth of 20.2% over the past five years, EPS growth is likely to clock in at 10% (the consensus is at 13%-14%) over the next five years.