Short interest figures for the end of December were released after the close yesterday, and as one might expect given the rally in equities, negative bets on individual stocks continued their post-election decline. 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 haven’t taken part in the rally. The average return of the 20 stocks listed is a decline of 1.47% (median: -1.08%). In terms of breadth, it’s a more even split with nine stocks up and eleven down, but still skewed negative.
You won’t find a lot of household names on the list. Many people will recognize companies like LendingTree (TREE), Restoration Hardware (RH), Lumber Liquidators (LL), Tempur Sealy (TPX), and Big Lots (BIG), but most of the others are all obscure small cap companies. In terms of individual returns, though, there haven’t been too many outliers. The biggest downside losers have been Eagle Pharma (EGRX) and World Acceptance (WRLD), while the biggest winner has been Greenbrier (GBX). As we said at the top, though, normally in a rising market environment you tend to see the most heavily shorted stocks do best. Therefore, if this trend of underperformance continues, it would be a cause for concern for the broad market.
Interested in a more in-depth analysis of short interest trends? Earlier today, 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.