Short Report: Eyepoint Pharmaceuticals bears cut bait after Phase 2 trial data

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 0.4%, the Nasdaq Composite was up 0.8%, the Russell 2000 index up 3.2%, the Russell 2000 Growth ETF (IWO) was up 2.7%, and the Russell 2000 Value ETF (IWN) was up 3.7% in the five-day trading session range through Thursday, December 7.

SHORT INTEREST GAINERS

• Ortex-reported short interest in Semtech (SMTC) jumped to a record high above 27% on November 9 and stayed around that level for a period of two weeks. Short positioning then receded in the final week of November, but bears have re-emerged this week, with shorts as a percentage of free float rising from 23% to 25% heading into the company’s earnings release on Wednesday evening. The boost in exposure may have been premature as shares spiked over 16% on surprise profit beat on Thursday, ringing in a 19% gain for the five-day period covered, though several sell-side firms were skeptical of the rally via price-target cuts on the stock, pointing to slower data-center revenue growth and continued channel inventory digestion.
• Estimated short interest on Kohl’s (KSS) troughed at a two-month low of 22.4% just over two weeks ago and has been rising steadily, increasing about two percentage points this week to 25.4% as of Thursday. On Wednesday, the Ortex-estimated short position briefly saw an all-time high around 30%. Shares meanwhile have been largely holding steady, gaining about 2% in the five-day period closed. Kohl’s stock had fallen 8.5% after reporting its earnings Q3 earnings two weeks ago but have now pared more than half of those losses.
• Estimated short interest in GameStop (GME) similarly hit a two-month low of 21% two weeks ago and since put in consecutive weeks of increase, gaining over three percentage points in that timespan to 24.1% – the highest level of the year. The build-up in the short position is tracking a two-week-long bounce in the share price, which also rose about 33%. This week, the 12% gain in GameStop over the five-day period through Thursday was punctuated by the company reporting a narrower than expected Q3 earnings loss but missing on revenue.

SHORT INTEREST DECLINERS

• Shares of Eyepoint Pharmaceuticals (EYPT) nearly tripled on Monday, when the company announced that its Phase 2 trial of EYP-1901, an investigational sustained delivery maintenance treatment for wet age-related macular degeneration, met its primary endpoint with both EYP-1901 doses demonstrating statistical non-inferiority change in best corrected visual acuity compared to aflibercept control and a favorable safety profile with no ocular or systemic serious adverse events. Gains continued on outsized volume for the rest of the week as shares ended Thursday up nearly 240% in the five-day period covered. The positive developments are not being disputed in the bearish positioning, with shorts as a percentage of free float falling 11 percentage points to 18.5% – a seven month low.
• As discussed in the prior report, Ortex-reported short interest on Cricut (CRCT) saw an outsized increase from 20% to a two-year high of 30% last week, though this week, the bearish expression has normalized, slipping back down to about 18%. Modest insider buying activity last Friday may have spooked the bears as the stock jumped about 5% on relatively high volume, though shares finished the five-day period through Thursday down less than 1%.