Short interest figures for the middle of January were released after the close Wednesday and as the rally in equities stalled out, traders took the opportunity to add some shorts to their books hoping that the stall would turn into a downdraft. The table below lists the 20 stocks in the S&P 1500 that have 30% or more of their free-floating shares sold short, and for each stock we also include how they have fared so far in 2017. Even though equities have rallied so far this year, the most heavily shorted stocks have completely sat out of the rally. The average return of the 20 stocks listed is a decline of 4.96% (median: -2.83%). In terms of breadth, it’s just as weak with only six out of the twenty stocks posting YTD gains.
The primary culprit behind the declines in the most shorted stocks this month is the consumer. Of the 20 names listed, eight are from the Consumer Discretionary (6) or Consumer Staples sectors (2), and of those stocks just one (LGIH Homes) is up YTD. Collectively, these stocks are down an average of 6.1% on the year, while the other 12 stocks are down an average of less than 4%. We’ve been discussing the ‘bricks to clicks’ trade and our Death By Amazon index for several years now, but based on the performance of many consumer related stocks so far this year, a lot of investors in the sector seem to still just be figuring it out.
Interested in a more in-depth analysis of short interest trends? Yesterday, we published our bi-monthly short interest report, which is available to all Bespoke Premium and Institutional clients. Click here to start a no-obligation 14-day free trial now.