Short Report: Bearish bets on Avis Budget recede as stock caves

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 1.4%, the Nasdaq Composite was up 1.9%, the Russell 2000 index was up 0.9%, the Russell 2000 Growth ETF (IWO) was up 1.1% and the Russell 2000 Value ETF (IWN) was up 0.6% in the five-day trading session range through May 1.

SHORT INTEREST GAINERS

• Ortex-reported short interest on Vital Farms (VITL) had troughed just above 20% in the last week of March as the stock price finally found a floor after six months of heavy selling. Bears are re-emerging however, rebuilding their positions into strength after a bid in the stock price this week. In a five-day period covered, short interest as a percentage of free float rose over 5 percentage points to 37.1%, while days to cover on the name was up from 5.0 to 5.5. Shares gained about 7% in the period and added another 4% with Friday’s rally, though the stock remains down 55% year-to-date.
• Ortex-reported short interest on Under Armour (UAA) collapsed from multi-year high of 35% in mid-January to as low as 21% entering the final week of March, remaining near that trough through the final week of April. This week, however, bearish positioning is on the rise while the stock price consolidates its April gains. In the 5-day period covered, short interest as a percentage of free float rose from 21.6% to 24.4%, and while the stock was down 1.4%, Under Armour shares have now bounced 16% from April 2 lows. The company reports its Q4 results on May 12.
• Ortex-reported short interest on BRC Group (RILY) troughed below 19% last week, the lowest level in two and a half years, before a spike in the stock price after better-than-expected Q4 results on Wednesday spurred an increase in bearish activity. Short interest as a percentage of free float jumped from 19.2% to 22.6% while days-to-cover rose from 5.8 to 6.9. Shares of BRC Group were up about 12% in the five-day period covered through Thursday and gained another 4.5% on Friday, with the year-to-date tally on the stock now at 92%.

SHORT INTEREST DECLINERS

• As previewed last week, following a build-up in bearish positioning in Avis Budget (CAR) in conjunction with the extreme run-up in the stock price since the last week of March, the unwind in bullishness has also produced significant profit-taking among bears. Pentwater Capital, which held an outsized position in the name, disclosed that it has sold 4.3M shares in a Form 4 filing on Tuesday, crystallizing the sharp selloff seen in the stock price this week. In the five-day period covered, Ortex-reported short interest on the stock also fell sharply, going from 92.7% to 64.8%, with days-to-cover on the name also down a significant margin from 4.2 to 2.3. Shares of Avis Budget were off by about 21% in the period through Thursday but remain higher by 45% year-to-date.
• Ortex reported short interest in Shift4 Payments (FOUR) had tracked in a sideways range of 33%-38% since the first week of March, though with the stock price seemingly halting its 8-month long decline, bears are also reducing their exposure. This week short interest as a percentage of free float declined from 36.4% to 31.4% – the lowest level since the second week of February. Days to Cover and Shift4 also slipped from 7.2 to 6.3 even as trading volume on the name has diminished. The stock was still down 4.3% in the five-day period covered through Thursday but rallied 2% on Friday and has now bounced about 14% from its April 9th lows. The company is set to report its Q1 results on May 7.