YWR: Short Squeezers
Let’s review the most shorted stocks and sectors in the US with a market cap greater than $2bn.
Disclaimer: Short interest data can be unreliable so we are looking for general trends. I have filtered for market caps greater than $2bn to avoid some of the funny data with small caps.
Top 30 most shorted stocks
What do we see?
The most shorted stocks are small; at the bottom of the market cap range. And Lots of biotech.
Kohls:
It’s one of the most shorted stocks in the world, and the high interest expense relative to operating income is concerning. However, there is a glimmer of hope that operating income stabilised in Q3.
MARA (Marathon Holdings) is a bitcoin mining company. Interesting, but no real view here.
20 most shorted sectors (Market Cap > $2bn)
(sorted by average Short Interest as % of Shares Outstanding)
When we look at the shorts by sector we see Department stores, Biotech and Contract Drilling are the top sectors by short interest.
Which fits the fund flow data from Goldman where Biotech and Energy are the two worst sectors for fund flows.
Department Stores is driven by the 32% short interest in Kohl’s.
Contract Drilling is interesting. Transocean, Helmerich & Payne, Valaris, Noble and Patterson are the most shorted names.
Coal is another hated sector, which is probably a good sign. You can check the database below for the individual names.
Real Estate Investment Trusts don’t make the Top 20 as a sector, but the sector does include notable stocks such as Blackstone Mortgage Trust (BMXT) and SL Green.
BXMT seems like it might be attractive at a 10% dividend yield (after cutting the dividend from 62cts/quarter to 47 cts), but I’m wary of the falling interest revenue. If Interest revenues continue to fall from $430mn/quarter to less than $400mn that DPS will get cut again to 35cts (or lower).
Kind of makes you wonder about the future health of $BX itself with the share price at all time highs.
How do we make money?
Biotech, no view other than INMB seems interesting (20X Upside in InmuneBio)
REIT’s are super hated, and I want to be contrarian, but they seem like slow death.
What sticks out is contract drillers. We will take a look at this sector in a future post.
Below is the full data set of short interest on 1,900 stocks as of November 5, 2024.
The data is also available under the ‘Data & Models’ tab on www.ywr.world.