Short Report: Bearish positioning in solar stocks up sharply

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 0.1%, the Nasdaq Composite was down 0.9%, the Russell 2000 index was down 2.6%, the Russell 2000 Growth ETF (IWO) was down 2.4%, and the Russell 2000 Value ETF (IWN) was down 2.4% in the five-day trading session range through Thursday, March 14.

SHORT INTEREST GAINERS

• Higher interest rates typically do not translate into strong gains in the solar energy space that is so reliant on multi-year financing, and so was the case this week, as solar stocks fell sharply in conjunction with a 20bps increase in the U.S. 10-year Treasury yields back to 4.3%. Hotter than expected CPI and PPI inflation gauges this week have pushed out expectations of the first FOMC rate cut back to June, according to CME data. Shorts are also betting that the pressure on the solar space from higher-for-longer interest rate environment will persist. Ortex-reported short positioning on Sunrun (RUN) rose from 14.9% to three-month high of 19.1%, that of Maxeon Solar (MAXN) rose from 30.8% to an all-time high of 33.9%, and that of Sunpower (SPWR) rose from 43.1% to an all-time high of 47.4%. Industry bellwether First Solar (FSLR), while not on our regular radar, also saw its shorts as a percentage of free float rise from 4.3% to 5.8% – a near three-year high. Shares of Sunrun were down 22.9%, Maxeon Solar were down 25.5%, Sunpower were down 7.9%, and those of First Solar were down 6.8% in the five-day period covered through Thursday.
• Ortex-reported short interest in HighPeak Energy (HPK) had been tracking in a range of 18.5%-21% since the first week of January before a more pronounced jump this week, rising from 19.8% to 27.0% – the highest level since November. Bears were eager to build their exposure to the Texas-based oil/gas drilling company after its disappointing Q4 results last week that saw a miss on revenue and a conservative spending outlook for 2024, along with the disclosure that the company is pursuing strategic alternatives. Shares had fallen as much as 20% following the results last Thursday, though this week saw a rebound of 5.7% in the five-day period covered.
• Estimated short interest in MGP Ingredients (MGPI) had started its ascend in the final week of February, and this week’s three percentage point increase from 24.8% to 27.8% has taken the short positioning as a percentage of free float to its highest level on record. More shorts jumped on the name after the company’s latest earnings on February 22nd, with Q4 results topping estimates, but its outlook for 2024 revenue falling short. MGP Ingredients shares were down as much as 17.5% after the results, though the stock has pared about half of those losses since then. This week, MGP Ingredients shares were down a marginal 1.5%.
• Ortex-reported short interest in eVTOL – electric vertical takeoff and landing – developer Archer Aviation (ACHR) troughed at a 5-month low of 19.0% in the first week of March as shares hit their lowest levels since July of 2023, though with the stock recovering, bears are renewing their bets on more losses. Shorts as a percentage of free float on the company spiked from 19.1% to 24.1% – a four-month high that is also within four points of its all-time high. Meanwhile, the stock price was up 14% in the five-day period covered, even though Archer Aviation remains down 18% year-to-date.
• Estimated short interest in Wayfair (W) had dipped from about 23% to 22% in the wake of the company’s better than expected Q4 earnings on February 22nd that saw the stock jump by over 10%. Sell-side research on the name was more cautious on the stock in the aftermath, focusing on expectations of a slowdown in Q1 while calling the quarter “better than feared”. Short positioning was again on the rise this week, rising from 22.4% to 24.8% – the highest level in three months. Wayfair shares continued their run with a 4.5% five-day period increase through Thursday, though the stock remains down 1% year-to-date.

SHORT INTEREST DECLINERS

• Ortex-reported short interest in Birkenstock (BIRK) took another notable dip this week – its second consecutive decline – slipping from 26.5% all the way down to 18.2% as bears again booked some profits. This marks the lowest level in short positioning since early November, when the company was only one month in its U.S. public trading. Birkenstock reported Q1 results on February 29, earning at least three higher price target calls on the Street, though shares are down 9.3% since that reporting date, down just over 3% year-to-date, and were down 4% in the five-day period covered through Thursday.