I suspect that many investors have focused on two numbers, in particular, when it comes to Medical Properties Trust (MPW -0.83%). One is 67%. That's how much Medical Properties Trust's share price is down from its previous high. The other number is 14.7%. That's what the company's dividend yield stands at now.

But those aren't the only figures worthy of your attention. Here's another number that Medical Properties Trust investors should watch like a hawk.

The short answer

As of Feb. 28, 2023, nearly 26.2% of Medical Properties Trust's stock float was sold short. Stock float represents the number of shares that are available for public investors to trade. It excludes any outstanding shares that are owned by company insiders or restricted from sale.

Why is this short percentage of float so important to watch? Mainly because it could set the stage for a short squeeze. In a short squeeze, short sellers scramble to cover their positions. This causes the stock to rise quickly, and that increase causes more short sellers to buy shares to eliminate their risk.

Medical Properties Trust's short percentage of float and a similar metric, its short percentage of shares outstanding, currently stand at their highest levels ever. The percentages are far above where they stood before or during the market meltdown of 2008 and 2009. 

The big question now is what have short sellers been doing since the end of last month. We'll know the answer to that question very soon: The new short interest numbers will be announced on March 24, 2023. If Medical Properties Trust's short percentages are markedly lower than they were at the end of last month, it would be a sign that some short sellers believe the worst is over for the company. If not, it will mean that short sellers are still betting that the stock will continue to decline even after losing two-thirds of its value since early 2022.

Potential catalysts 

The higher Medical Properties Trust's short percentage of float is when it's revealed later this week, the greater the odds are that there could be a short squeeze on the way. Of course, short squeezes need catalysts. What could the catalysts for the healthcare real estate investment trust (REIT) be?

One possible candidate is any encouraging news about a top tenant's progress in paying deferred rent. Medical Properties Trust CFO Steven Hamner stated in the company's fourth-quarter conference call that Prospect Medical didn't pay its full rent in January or February. 

There is reason to at least be cautiously optimistic on this front. Prospect is making progress with its divestitures of properties in Rhode Island and Connecticut that should give the hospital operator additional cash. It also has a managed care business that could be attractive to potential acquirers. 

Some short sellers could also expect Medical Properties Trust to cut its dividend. Any confirmation that this isn't going to happen could potentially spark a short squeeze.

REIT stocks tend to move higher when interest rates fall. I would rank a rate cut as only a remote possibility for a short-squeeze catalyst. However, if the economy tanks (perhaps in the aftermath of the banking turmoil) maybe the Fed would lower interest rates.

The long (-term) answer

I think that a short squeeze on Medical Properties Trust could happen at some point over the next few months. However, I wouldn't go as far as to say that one is likely. Betting on a short squeeze isn't the best reason to consider buying the stock.

But there are reasons why aggressive investors could be intrigued with Medical Properties Trust. The worst for the company just might be over. CEO Ed Aldag maintained in his opening comments in the Q4 call: "We find the outlook for our tenants extremely encouraging on all fronts." If the bleeding has stopped, investors who buy the stock can lock in an especially juicy dividend yield.  

Over the long term, Medical Properties Trust should have a key tailwind working in its favor. The demand for hospital services should increase as the population ages. The REIT could also benefit from a "survival-of-the-fittest" dynamic where weaker hospital operators are culled, with stronger ones thriving.

Medical Properties Trust's short percentage of float truly is a number that investors should closely watch right now. My prediction, though, is that it won't be important for too much longer.