Information Technology

The weeklong rally from last week’s lows has taken a bite out of the $93.7 billion of mark-to-market profits, +11.12%, short sellers have earned since the beginning of October. Over the last week the S&P 500 index increased by 3.31%, the Nasdaq by 4.3% and the Russell 3000 by 3.23%. The S3 Blacklight platform tracks over 8,000 U.S. domestic equity shorts worth over $825 billion, which incurred mark-to-market losses of $23.3 billion, or -2.86%, over the last week.

Twitter Inc. (TWTR US) short interest is $1.45 billion, with 44.29 million shares short, for 6.46% of the available float. The stock loan fee 0.30%, it is a General Collateral stock (easiest to borrow stocks & bonds with the cheapest rates.) TWTR is the third most shorted stock in the Interactive Media & Services Sector behind Facebook & (FB US) Google (GOOGL US.)

Like Black Friday shoppers, investors are discounting prior performance and looking forward to the holiday shopping season to decide which retailors to put on their naughty or nice lists. Most of the larger retailers posted impressive previous quarter sales but investors are looking closely for signs for potential holiday misses. Retailers such as Target Corp (TGT), Kohl’s Corp (KSS) and TJX Cos (TJX) are looking at profit margin rates and profit guidance’s that may not meet expectations as they ramp up e-commerce, shipping and remodel stores to lure in buyers. Several retailers are having revenue and operational difficulties with L Brands (LB) cutting its dividend, Lowes (LOW) closing down two home improvement subsidiaries and its Mexican retail operation and Sears (SHLDQ) filing for bankruptcy.

Ihor Dusaniwsky, Author

The possibility of an economic slowdown has hit the technology sector hard, with the S&P 500 Information Technology Sector declining by 10% in the fourth quarter. Today’s poor reported results from both Nvidia (NVDA) and Applied Materials (AMD) pushed most of the companies in the Semiconductor and Semiconductor Equipment Sector into the red. Short sellers in the sector benefited to the tune of $824 million in mark-to-market profits, with the main winners being NVDA and AMD short sellers who are up $529 million and $162 million in mark-to-market profits, respectively.

Hong Kong\China short sellers have been actively shorting into the declining Hong Kong and Chinese markets and generated $17.3 billion in mark-to-market profits, +18.0%, as the Hang Seng Index declined 16.7% and the CSI 300 Index declined by 25.8% in 2018. Short sellers continue to increase their positions as their profits build, adding $1.7 billion in new shorts throughout the year. Hong Kong\China with $80 billion in short interest is the second most shorted country behind the U.S. ($911 billion) and ahead of Japan ($73 billion) and the U.K. ($66 billion.)

GreenSky Inc. (GSKY) is down 36% today and down 59% from its May IPO price of $23 on lower than expected quarterly revenues and less than upbeat forecast for the rest of the year. GreenSky’s stock is down over $5/share today and short sellers are up $49 million in mark-to-market profits, doubling their year-to-date profits and are now up $95 million since GreenSky’s IPO.

Fitbit short interest is at $221.14 million, with 46.75 million shares shorted, for 22.20% of the float.

Fitbit shares shorted has increased by 5.2 million shares in October, representing a 12.54% increase, and shares shorted increased by 2.04 million shares over the last week, a 4.56% increase. Short sellers had pessimistic expectations about Fitbit’s 4th quarter results.

Red Hat (RHT) short interest is at $652.4 million, with 5.59 million shares shorted, for 3.21% of the float.

Red Hat is the 7th largest short in the Systems Software Sector. RHT shares shorted have been decreasing since the end of September, down 1.66 million shares, or -23% since September 27th and down 190k , or -3%, over the last week.

DXC Technology is down 13% on exit of head of America’s due 10-15% drop in sales. Short interest is at $457 million with 5.43 million shares being shorted (up 185,000 shares in October) representing 1.94% of the float. Short sellers profited $68 million in mark-to-market losses today with additional short selling taking place this morning.

Apple Inc.’s (AAPL) stock price is rallying over 5% today on greater than expected current quarter sales and revenue forecasts. AAPL is trading above $200/share and is on the verge of becoming the first $1 trillion company. AAPL continues to be the second largest equity short in the U.S. market, behind Tesla Inc (TSLA) and ahead of its four FAANG cohorts. AAPL short sellers are down -$442 million in mark-to-market losses today on the price move, increasing year-to-date mark-to-market losses to -$1.51 billion.