Short Report: Bearish positioning on Encore Wire reaches record high

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 4.4%, the Nasdaq Composite was up 5.5%, the Russell 2000 index up 3.4%, the Russell 2000 Growth ETF (IWO) was up 2.7%, and the Russell 2000 Value ETF (IWN) was up 4.2% in the five-day trading session range through Thursday, November 2.

SHORT INTEREST GAINERS

• Estimated short interest on Encore Wire (WIRE) saw another step higher this week, rising from 26.0% to 27.8%. Short positioning on the stock has been on an upswing for about eight months, and this week marked a new record high, even as the company reported a Q3 earnings beat late last week and its CEO remarked that the demand for its aluminum and copper wire products has remained “strong”. Shares of Encore Wire were up 2.8% in the five day period covered through Thursday and up another 3.4% on Friday.
• Estimated short interest on Lemonade (LMND) has been on a steady upswing from mid-May, when it saw its lowest level of the year around 19%. This week, as the company reported much better Q3 earnings results and raised its guidance, that increase accelerated, with shorts as a percentage of free float rising from 25.7% to 27.6% – the highest level since July of last year. Likewise, days to cover on the stock matched its highest level of the year at 15.2 with a marginal rise. Shares of Lemonade had been down nearly 60% from mid-July-highs and just over 20% year-to-date heading into earnings, though the stock jumped 47% in the five-day period covered through Thursday and added another 7% to the gains on Friday.
• Estimated short interest on Canada Goose (GOOS) continued to rise this week, extending the uptrend that started in mid-August. Shorts as a percentage of free float were up from 28.6% to 30.1% – the highest level since mid-April. Shares of Canada Goose, along with its premium-brand Apparel names, have struggled with waning demand highlighted by the company’s Q2 results and guidance cut this week. The stock fell 8.7% the day after the report and was off by 9.4% in the five-day period covered. Canada Goose is also now down 44% from its late-July highs.
• Estimated short interest in Zynex (ZYXI) traced out a four-month low of about 26% in the first week of October, but had not breached 28.5%. This week however, shorts as a percentage of free float rose from 27.4% to 29.7% – the highest level in about seven weeks. Last Thursday, Zynex reported an in-line Q3 and brought down the high end of its prior FY23 guidance, though the company also declared a review of strategic alternatives that “may include take-private offers”. The stock jumped 17% the following session, while also tallying a 27% gain in the five-day period covered, though short positioning buildup shows that bears are undeterred as of yet.

SHORT INTEREST DECLINERS

• Estimated short interest on Sunnova Energy (NOVA) peaked around 32% in early August before settling in the 27.5%-30% range for the following two and a half months, just as the stock sold off sharply. Shares of Sunnova are down 33% from that early August short-interest peak and down 57% from mid-July high – tracking the steep declines across the Solar segment, with Invesco Solar ETF (TAN) also falling about 37%. This week, with the fever of rising interest rates finally breaking and Solar group recovering, shares of Sunnova Energy were also up about 9% in the five-day period through Thursday and up another 4% on Friday. Bears are taking notice of the brewing short squeeze, reducing their exposure from 30.5% to 29.0%, according to Ortex data.