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Short Report: Bears growl at crypto stocks amid FTX fallout

Short interest in Silvergate Capital doubles as bears set their sights for more crypto turmoil following FTX debacle

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. As a basis of comparison for stocks discussed below, the S&P 500 index was up 1.2%, the Russell 2000 index up 2.7%, the Russell 1000 Growth ETF (IWF) was up 3.6%, and the Russell 1000 Value ETF (IWD) was up 2.6% in the period range.

SHORT INTEREST GAINERS

  • Ortex-reported short interest in stocks with exposure to the cryptocurrency economy has gone up across the board in the wake of the FTX implosion and the subsequent pressure in token prices. Short positioning as a percentage of free float in Marathon Digital (MARA) was up about five percentage points to a three-year high of 34.2%, that of Riot Blockchain (RIOT) was up two points to a two-month high of 18.2%, and that of Microstrategy (MSTR) rose over four points to an all-time high 41.5%. Silvergate Capital (SI), which has come under scrutiny regarding its liquidity and balance sheet, has also seen the short position on its stock more than double from 13% to a record-high of over 28% this week. Silvergate shares are down 10.4% in the five-day period covered. Marathon Digital was down 4.2%, Riot Blockchain was up by 3.6%, and Microstrategy rose 12.8% from the close of last Wednesday to the end of this week’s Thursday trading.
  • Estimated short interest in GroupOn (GRPN) had fallen to a five-month low around 32% in mid-November but just registered its second consecutive week of increase, rising from about 33% last week to 38% as of this Thursday. The stock popped up nearly 30% higher on November 8th following its Q3 earnings report but has since pared some of those gains. This week however, GroupOn shares traded up 7.4% in the five-day period covered through Thursday.
  • Bears are trading around the fluctuations in Rocket Companies (RKT) stock, with reported short positioning tracking the price action closely. The stock itself is also closely aligned with the action on mortgage rates, as the cost of borrowing has come in over the past three weeks from the highs in early November. This week, the Ortex-reported short position on Rocket shares was up from about 31% to 34.5%, which is less than a point away from a 20-month high. Days to cover on the name has also gone up notably, rising from 9.4 to 11.9. In the five-day period covered, shares of Rocket Companies were up 10.2%.

SHORT INTEREST DECLINERS

  • Estimated short interest in Altice USA (ATUS) had built up to a seven-month high above 22% as of mid-November but the position was pared meaningfully this week, sliding below 17% – a four-month low. The stock has also approached its worst levels of the year below $4 a share this week, and the announcement that the company has concluded the strategic alternatives review for its Suddenlink business without any plans for action did not help matters. While the bearish position is receding, Altice USA was down 12.8% in the five-day period covered.
  • Ortex-reported short interest in Cutera (CUTR) reached its highest levels of the year around 41% as the company headed into earnings on November 3 but has since retreated to a 2022 low with four consecutive weeks of decline. This week, the estimated shorts as a percentage of free float were down nine percentage points to 21.7%. The stock has also staged a strong rally this week on significant volume, rising 17% in the five-day period covered, just as the company had announced on Thursday that it is addressing concerns regarding its marketing materials that the FDA had previously outlined in a Warning Letter.

Keywords: Short selling, short interest, days to cover, securities, lending, utilization, sentiment analysis, GameStop, AMC, Silvergate Capital, crypto, FTX, GroupOn, Rocket Companies, Altice, Cutera

Published first on TheFly

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