S3 Analytics: October 7th – 13th Best and Worst U.S./Canadian Short Performers

Every week, S3 tracks short sellers’ equity positions in the US and Canada, revealing the trades that delivered positive results or missed the mark.  After tracking $919 billion worth of short positions, the following is a list of this week’s top five best and worst performing equity shorts.

CHTR After a 40% run-up in price, cable telecommunications company Charter Communications is down 9% from its year-to-date high of $402.50 September 6^th. Shorts were down over $1 billion in mark-to-market losses before recouping $183 million in profits as the stock fell 6% and is heading towards a $340-$330 support level. Charter’s chances for a potential takeover took a hit as Altice (ATUS) denied any takeover speculation and Verizon is no longer looking for a cable outlet for its content, taking Charter and Comcast (CMCSA) of play. TSLA from top loser to top winner

BDX Medical technology company Becton Dickenson & Co.’s stock price fell 4.1% last week as the U.S. Preventive Services Task Force released a draft recommendation on cervical cancer screening which no longer recommends co-testing for both HPV assay and cytology, as per Cowen analyst Doug Schenkel. BDX’s BD Surepath Pap test and other screening products will be negatively affected if the recommendation is implemented. BDX short interest has increased by $1.9 billion, or 319%, to $2.5 billion this year even as shorts are down $212 million in year-to-date mark-to-market losses for the year. BDX is now the largest short in the Health Care Equipment sector, ahead of Intuitive Surgical (ISRG) with $1.9 billion.

SAGE The day after its year-to-date high of $88.52 on Monday 9/11, Biotech Sage Therapeutics reported that the late-stage trial on its SRSE seizure drug, brexanolone, failed to meet its primary endpoint. The stock slid over 28%, ending the week at $62.36. With last week’s $106 million in mark-to-market profits, SAGE short sellers are still down $42 million in yearly losses.

ICPT Biotech Intercept Pharma’s stock price fell 19% last week to $94.88, slightly rebounding off its year-to-date low of $87.41 on Thursday 9/14 after it sent a letter to health care providers citing liver damage and possible death resulting from dosages of its drug Ocaliva. Short sellers are now up $37 million in mark-to-market for the year. Short interest has decreased 14% this year, it is presently at $456 million after hitting a yearly high of $770 million in late June. 2^ND WEEK IN A ROW!

REGN Even though Regeneron Pharma’s and Sanofi’s (SAN FP) phase 3 clinical trial on its asthma drug Dupixent met its two primary endpoints, investors were not overly impressed with the results and REGN’s stock price slid 8% for the week. REGN is the sixth largest short in the Biotech sector with short interest of $1.4 billion and mark-to-market losses for the year of $228 million for the year.

TSLA Electric car manufacturer/software company Tesla Inc.’s stock price increased by 10% last week, continuing the year-long rally that has the stock up 75% in 2017. This week’s good news was the announcement by the Chinese government that they may ban the manufacturing and sales of gasoline powered cars in the not too distant future. This news follows the announcement that the U.K. and France are contemplating the ban of gasoline powered cars by 2040. Tesla continues to be the most shorted equity in the U.S. market at $10.9 billion, behind only Alibaba Group (BABA) at $24.4 billion. Shorts continue to increase their Tesla short exposure even though they are down $5.3 billion in year-to-date mark-to-market losses.

NVDA 3D graphics processor developer NVIDIA’s stock price spiked on Friday 9/15 after Evercore ISI analyst CJ Muse boosted NVDA’s price target to $250 due to the market’s under evaluation of the potential revenues derived from its Artificial Intelligence product line. NVSDA is the undisputed leader in the A.I. marketplace, both as a product innovator in computer-learning design and development. NVDA is the second largest short in the Semiconductor sector with $3.2 billion of short interest, only behind Intel at $4.2 billion. Short sellers are steadfast in their conviction even though they are down $1.9 billion of mark-to-market losses in 2017. NVDA is the 3^rd worst performing short world-wide, only behind Alibaba (BABA) and Tesla (TSLA).

T After hitting a year-to-date low of $35.59 on Friday 9/8, AT&T Inc.’s stock price rebounded 4.24% to $37.10. AT&T is the third largest worldwide equity short at $6.9 billion, trailing only Tesla (TSLA) and Apple (AAPL). AT&T’s short interest has been increasing throughout 2017 with short exposure up $2.9 billion, or 72%. With AT&T’s stock price down almost 10% on the year, short sellers have had a profitable year. Shorts are up $502 million in 2017, a return of 9.3% on an average short position of $5.4 billion.

INTC Semiconductor giant Intel Corp.’s stock price rose 5.14% last week, to $37/share. Intel’s stock price is relatively flat for the year, up 2% including last week’s 5% rise, but shorts have been steadily building up their positions in the microprocessor and chip manufacturer making it the largest short in the Semiconductor sector and 6^th largest equity short in the U.S. market. Intel short interest is $4.2 billion, up $1.4 billion or 46% in 2017. Intel short sellers are down $116 million in year-to-date mark-to-market losses.

NFLX Internet content streamer Netflix Inc.’s stock price was up 3.4% last week, with its yearly performance nearing 50%. NFLX short interest is up 81% this year to $5.4 billion, the largest short in the Internet retail sector, ahead of Amazon.com (AMZN) with $4.8 billion and the 4^th largest equity short in the U.S. market, behind only Tesla (TSLA), Nvidia (NVDA) and Apple (AAPL). Netflix shorts are down $1.6 billion for the year, down 41%.

Want deeper insight into the above analysis?

Contact: Ihor.Dusaniwsky@S3Partners.net

Managing Director Predictive Analytics, S3 Partners, LLC

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