Short Report: Bears scale back on meme names amid renewed volatility

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 1.6%, the Nasdaq Composite was up 2.2%, the Russell 2000 index was up 1.1%, the Russell 2000 Growth ETF (IWO) was up 1.3%, and the Russell 2000 Value ETF (IWN) was up 0.8% in the five-day trading session range through May 16.

SHORT INTEREST GAINERS

• Ortex-reported short interest in MGP Ingredients (MGPI) had slipped to a one-month of 27.4% late last week in the wake of a better than expected Q1 earnings report earlier in the month which drove a 5% jump in the stock price. Bears were emboldened by the stock giving up some of its gains this week however, with shorts as a percentage of free float rising to 30.0% – a multi-year high. Likewise, days-to-cover on the name was up from 13.3 to 17.0 this week as trading volume receded. In the five-day period covered, in MGP Ingredients shares were down 3.5%.
• Estimated short interest in Bowlero (BOWL) had trended lower from early February through late April, hitting a trough just below 65% on April 26th. Shorts as a percentage of free float have since risen for three consecutive weeks however. This week’s increase from 68.8% to 72.5% takes that short positioning to the highest level in six weeks. Meanwhile, with trading volumes in the stock remaining subdued through March and April, bid-to-cover on the stock has risen from 12.6 to 14.0 – the highest level since late 2022. In the five-day period through Thursday, Bowlero was up 6.3% this week as the stock recovered from its post-earnings plunge two weeks ago.
• Ortex-reported short interest in Vertex Energy (VTNR) slipped from a one-month high of 22.0% two weeks ago all the way to 19.7% – the lowest level since late January – just as the company released its Q1 results last Thursday. Traders booked profits as Vertex posted a wider than expected loss and the stock fell 17%. This week however, short positioning as a percentage of free float has nudged up again, rising a percentage point to 20.8%. Shares of Vertex Energy meanwhile were down just under 3%.

SHORT INTEREST DECLINERS

• This week’s return of “meme stock” volatility, spearheaded by the resurfacing of Twitter/WallStreetBets Reddit community personality “Roaring Kitty” has not had nearly the impact on short positioning in those names as it did in early 2021, when the accumulation of bearish bets was far more extended. Shorts as a percentage of free float in GameStop (GME) and AMC Entertainment (AMC) has only modest declines – that of the former slipping from 24.8% to 23.6% and that of the latter sliding from 20.1% to 14.9%. The sharp reversal in the price action on the stocks is also suggesting that volatility may be more of a flip rather than the start of a prolonged trend. AMC had at one point on Tuesday more than quadrupled relative to last Friday’s close before ending the week up 51%. Likewise, GameStop’s opening highs on Tuesday were nearly quadruple relative to Friday May 10th close, though the stock closed the week up 27% vs. those levels.
• Ortex-reported short interest in Westrock Coffee (WEST) hit its 2024 peak above 68% in early April but has since made a steady retreat for five consecutive weeks just as the stock price continued to push higher. This week, the decline in shorts as a percentage of free float accelerated, sliding from 64.7% to 56.6% – the lowest level since April 5th. Likewise, with trading volume picking up in the month of May, days-to-cover on the name slipped from 39.3 to 36.6. Shares of Westrock Coffee were flat in the five-day period covered, though the stock is up 16.5% from its Q4 pre-earnings level on March 12 – a 2024 trough – and also up 4.3% year-to-date.