Short Report: Bears boost bets on more losses for Sphere Entertainment

Welcome to this week’s installment of “The Short Interest Report” – The Fly’s weekly recap of short interest trends among some of the most widely followed high-short-float stocks. Using the data from our partner Ortex.com, which utilizes the latest information from stock lenders to estimate short interest changes for thousands of publicly traded companies, this report will screen for some of biggest changes in short interest as a percentage of free float and days-to-cover ratios while also considering the short interest data on some of the more volatile and heavier-traded names of the week. Based on the availability of data from Ortex, the report tracks the trading period that covers prior Friday through Thursday of this week, excluding holidays. As a basis of comparison for stocks discussed below, the S&P 500 index was down 1.7%, the Nasdaq Composite was down 2.1%, the Russell 2000 index was down 3.3%, the Russell 2000 Growth ETF (IWO) was down 4.2%, and the Russell 2000 Value ETF (IWN) down 2.4% in the five-day trading session range through November 14.

SHORT INTEREST GAINERS –

• Estimated short interest on Sphere Entertainment (SPHR) had been tracking the stock price action since the second week of October, when the news of a term loan refinancing by MSGN Holdings and the plans to bring a venue to Abu Dhabi drove a 21% rally in shares and also a four percentage point increase in bearish positioning. This week, however, the increase in shorts as a percentage of free float from 26.7% to 31.4% coincided with a 9% decline in the stock price through the five-day period ended Thursday, as bears bet on downward momentum gathering steam and looking less inclined to lock in profit. Shares of Sphere are still up this year, however, gaining 18% year-to-date.
• Ortex-reported short interest on Telesat (TSAT) rose from 24.1% all the way to 39.6% – a five-week high, with bears betting that the bounce of the past week would not be sustained given the already extreme run-up over the prior three months. Shares of Telesat had gone up 50% from the time the company reported Q2 results in mid-August through mid-October, but retreated with a 25% pullback on more steady volume from the final week of October through the first week of November. In the five-day period covered through Thursday, Telesat gained 17%.
• Estimated short interest on MGP Ingredients (MGPI) troughed last week around 25% after a seven-week long seven-percentage-point downtrend that coincided with a 42% drop in the stock price, which was mainly driven by mid-October’s negative Q3 pre-announcement and then the final Q3 results on October 31. The stock has managed only a modest bounce in the first week of November however, emboldening renewed short-selling. Shorts as a percentage of free float jumped from 25.0% to 30.9% – within a percentage point of record highs. The stock meanwhile traded up 2.8% in the five-day period covered but has now fallen about 50% year-to-date.
• We had profiled Groupon (GRPN) short interest reaching a two-year high of about 45% three weeks ago, and bearish appetite for the stock has only grown since. This week, shorts as a percentage of free float on the name rose from 43.6% to 51.5%, and while days-to-cover came in from 11.2 to 10.8%, this was largely due to explosion of trading volume after the company reported Q3 results and cut its FY24 revenue outlook and the midpoint of expected EBITDA range on November 12. Groupon shares were down 24% in the five-day period covered, with the stock now down 37% year-to-date.
• Ortex-reported short interest on Hertz Global (HTZ) had tracked in a 29.8%-32% band from the final week of September through the first week of November, while the stock also traded largely sideways and within 25c of the $3.00 per share mark. This week however, in spite of Hertz reporting below-consensus estimates, the stock bounced amid commentary that the company will complete its fleet rotation by the end of next year and bears were also drawn in to the rally, with shorts as a percentage of free float rising from 31% to 36%. Shares were up 32% in the five-day-period covered and the highest level since August, though the stock is still down 61% year-to-date.

SHORT INTEREST DECLINERS –

• Estimated short interest in Kura Sushi (KRUS) peaked around 40% in mid-September with bears looking undeterred by the stock’s 76% advance over a period of about seven weeks. With shares continuing their strong upward momentum however, more and more shorts have cut bait over the past two months. This week, short positioning as a percentage of free float was down even more sharply, slipping from 32.5% to a seven month low of 26% even though the stock traded flat. Shares of Kura Sushi are now up 83% from early August lows and also up 17% year-to-date.