In a post earlier today on the US stocks with the highest levels of short interest, we highlighted the fact that former IPO high-flier Shake Shack (SHAK) currently has the highest level of short interest as a percentage of float. Shake Shack hasn’t been a public company very long, but it has already had quite a ride. After pricing at $21 at the end of January 2015, SHAK closed on its first day of trading at $45.9 for a one-day gain of 118.5%. SHAK wasn’t done there, though. After that first day gain, the stock kept rallying reaching a peak of $96 and change in May 2015. That’s where SHAK ran out of gas, though.
Since that May 2015 high, shares of SHAK have steadily drifted lower dropping to as low as $30 in early 2016. Ever since then, the stock has essentially been rangebound, trading between the low $30s and $40 per share. Given its valuation at the time of the IPO, it wasn’t a surprise to see negative bets against SHAK increase. Once the stock peaked, short interest continued to rise. It reached as high as 4 million shares at the stock’s lows in early 2016. What is interesting to note, however, is that since its lows in early 2016, the pace of negative bets has accelerated to the upside, with short interest levels increasing by 132% to its current level of 9 million shares, or 49% of the stock’s float. Clearly, investors are anticipating that once the stock breaks out of the sideways range it’s in, the next leg will be lower. Whether they are right is an entirely different question.Start a two-week free trial to Bespoke Institutional to see our complete semi-monthly look at short interest trends across the market.