Short Report: Bears look to fade Archer Aviation ascent

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 up 1.4%, the Nasdaq Composite was up 0.5%, the Russell 2000 index was up 2.6%, the Russell 2000 Growth ETF (IWO) was up 2.7%, and the Russell 2000 Value ETF (IWN) was up 2.7% in the four-day trading session range through November 28.

SHORT INTEREST GAINERS –

• Ever since a bullish initiation note from Needham on November 19, arguing that the industry momentum in aircraft delivery and air taxi network operation has “left the hangar”, investor interest in Archer Aviation (ACHR) has been profound. The stock more than doubled in the two-week span and has now gained 56% year-to-date, also tallying a 40% gain in the four-day period covered. Bears, meanwhile, had covered their bets from the highs of 29% on November 8th all the way down to 20% as of this past Monday, but took out more exposure the rest of the week. According to Ortex data, short positioning as a percentage of free float on Archer was up from 20% to 24% as of Wednesday, November 27.
• Estimated short interest on Velocity Financial (VEL) had tracked sideways in 27%-29% range from the last week of September through the middle of November. Short positioning then briefly broke lower just below 27% last week but spiked up in the final day of the week, rising to about 33% – a record high. Velocity Financial shares meanwhile have traded with a more defined uptrend in November, rising 6.4% for the month and have now returned 19% year-to-date. In the four-day period through Wednesday however, the stock is up just 0.7%.
• Ortex-reported short interest in Dianthus Therapeutics (DNTH) plateaued for much of November even as the stock came under significant pressure in the middle two weeks of the month in the wake of its Q3 results, slipping 38% from high to low. Short-selling activity perked up this week however, with short interest as a percentage of free float rising 34.9% to 42.3%, nearly matching September’s all-time high. Bears are betting that this week’s 15% stock price gains will be short lived and that profit-taking into the year-end continues, as Dianthus has already rallied 130% year-to-date.

SHORT INTEREST DECLINERS –

• Ortex-reported short interest on Soleno Therapeutics (SLNO) is down sharply after hitting all-time highs around 30% in the first week of November. Short positioning as a percentage of free float came down from 23.9% all the way to 15.4% – the lowest level since mid-March, with days-to-cover also slipping from 2.5 to 2.1 amid an uptick in trading volume this week. The stock had reacted positively to Tuesday’s announcement that the FDA extended its NDA review period for DCCR extended-release tablets for the treatment of Prader-Willi syndrome, though it had pared all of those gains by the end of the week. Shares were up 2.2% in the four-day period through Wednesday but fell 6% on Friday. Year-to-date, Soleno Therapeutics is now up 31%.
• Estimated short interest in AMC Networks (AMCX) traversed within a three-point band above the 20% level for about two months even as the stock registered steady gains of 34% from its September 24th lows. This week however, shorts as a percentage of free float finally yielded to the bullish sentiment, slipping from 20.8% to seven-month lows of 16% before ending the week at 17.3%. With volume on the stock drying up, days-to-cover on AMC is down from 4.7 to 4.4. Shares were down 3% in the four-day period covered, and also remain down about 50% year-to-date despite finding some support as of late.