Short Report: Quantum Computing bears add exposure into selloff

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 0.3%, the Nasdaq Composite was up 0.8%, the Russell 2000 index was up 0.4%, the Russell 2000 Growth ETF (IWO) was up 1.0%, and the Russell 2000 Value ETF (IWN) was down 0.2% in the five-day trading session range through October 9.

SHORT INTEREST GAINERS

• Ortex-reported short interest in Quantum Computing (QUBT) – profiled last week among the decliners for traders’ reluctance to fade the rally – has finally registered a more meaningful retreat, and the bears are piling on rather than rushing to take profits. Short interest as a percentage of free float rose four percentage points to 26.2%, with much of the shift following a peak in the stock last Friday – shares were still up 6.7% in the five-day period covered, but down 17% from Friday’s fresh all-time highs through Thursday and off by another 11% on Friday amid broad market risk aversion. Year-to-date however, Quantum Computing is still up by 15%.
• Ortex-reported short interest in The Cheesecake Factory (CAKE) troughed in late August around 17% – about a month after the conclusion of the stock’s 50% rally from April lows to July highs. Bearish positioning has since turned higher as the stock retrenched, and this week, short interest as a percentage of free float saw an especially pronounced move from 20.1% to 24.2%, a three-and-a-half year high. The Ortex estimates are similarly reflected in the exchange data, which saw short interest tough in the first half of August at 18.5% and then turn north to 21% through September, with October figures likely to show further ascend. The stock was down 2.6% in the five-day period covered through Thursday, though shares broke down to five-month lows with another 3% decline on Friday. Year-to-date, Cheesecake Factory is still up about 10% however.
• Ortex-reported short interest in Upstart Holdings (UPST) troughed at a 4-month low around 21% in late July when the stock price peaked, bounced higher to 29.5% in mid-September, and then pulled back to 25% into September-end as bears reduced exposure along with declining shares. This week however, shorts as a percentage of free float jolted from 25.2% to a one-year high of 30% despite consolidation in price action, though with the stock’s 7% drop on Friday and the bears’ seeming shift to add exposure into the decline, that short interest positioning may have further upside. Upstart shares were down just 1% through Thursday, but year-to-date, the stock is now off by 21%.
• Ortex-reported short interest in uniQure (QURE) initially shrunk from 19% to 14% in the final week of September when the stock price more than doubled in the aftermath of a constructive readout from the company’s Phase I/II study of AMT-130 study in Huntington’s Disease. Shorts as a percentage of free float bounced this week however, rising from 16.1% to 22.8 – a two-month high – even as the stock remained bid up by 17% in the five-day period covered. Meanwhile, the spike in trading volume has taken days-to-cover on the name from 1.6 to 0.4. Year-to-date, shares of uniQure are now up 248%.

SHORT INTEREST DECLINERS

• Up until last week, Ortex-reported short interest in Dave & Busters (PLAY) has been on the rise since the last week of July when it troughed at 22.5%, in step with heavy selling in the stock price. This week however, with shares having shed more than half of their value in just over two months and despite another 5.3% drop in price in the five-day period covered, short positioning as a percentage of free float was finally dialed down to 35% to 28.5%, with bears presumably finding other overheated areas of the market. Despite the simmered down trading volumes, days-to-cover on Dave & Busters was also reduced from 6.6 to 6.2. Year-to-date, the stock is now down 42%.