Earnings week continues to provide some solid evidence that the U.S. recovery is in full swing. But not all companies are benefiting from the bullish sentiment in the market.
According to IHS Markit, short sellers are smelling blood in the water around dozens of companies set to release earings later this week.
Tech firms make up a sizable number of short targets, including global names like iStyle in Japan, with short interest of around 11.4%. By comparison, though, iStyle is doing great. Some American companies….not as great. Short interest is chewing up at least 24% of these shares traded in the U.S. Check to see if any of these are in your client portfolios ahead of earnings Wednesday, Thursday and Friday.
The 10 Most Shorted Stocks In North America
| Company |
Ticker |
Earnings Release |
% Short |
| Home Capital Group |
HCG |
March 3, 2017 |
50.40% |
| Computer Programs |
CPSI |
March 4, 2017 |
29.80% |
| US Concrete |
USCR |
March 4, 2017 |
29.20% |
| Axon Enterprises |
AAXN |
March 3, 2017 |
29% |
| Heron Thereapeutics |
HRTX |
March 4, 2017 |
26.40% |
| Banc of California |
BANC |
March 4, 2017 |
26.10% |
| Flotek Industries |
FTK |
March 3, 2017 |
25% |
| 3D Systems |
DDD |
March 3, 2017 |
24.90% |
| Seritage Properties |
SRG |
March 4, 2017 |
24.80% |
| California Resources |
CRC |
March 4, 2017 |
24.70% |
Some of those stocks have gone through the roof since the election. Banc of California, which trades at just 11.5x earnings, is up 63.5% over the last six months and 22.4% so far this year.
Others have been getting beat up. Home Capital Group, listed in Toronto, is the worst of the lot, down 75.8% this year. The company announced some preliminary first quarter results last week to calm the market after the Ontario Securities Commission accused it of making misleading statements. The company’s stock fell by over 60% last week after the firm announced that it was seeking emergency liquidity to plug a gap in its balance sheet left by recent withdrawals.
“The post election bull market has made it tough going for short sellers over the last few months. Yet despite the tough macro environment for contrarian investors, shorts have still managed to correctly call several of this year’s worst stock collapses”, says Simon Colvin, a research analyst for Markit.
