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Sep 2, 2016

S3 BLACKLIGHT: Short Sellers Jumping Aboard Carnival Cruise

Carnival Cruise (CCL US), the cruise ship vacation operator, fell as much as 5% in early trading today on the back of a Morgan Stanley rating cut to underweight, reflecting rising risks and lower peer group multiples.  Although demand for taking a cruise may be subsiding, hedge fund demand for borrowing shares to sell short has been riding the wave higher.

According to the S3 Velocity Indicator, a measure of the real-time relative change in shorting activity, both the 7 and 30 day velocity trend lines have spiked considerably since mid-August.  Most notably, borrow volume has surged almost 50% over the past 2 weeks of trading.  Current short interest is now estimated to be at a multi-year high of up to $1.2billion, looking back to 2015.  

With the company due to announce Q3 earnings on 9/20, short sellers have been positioning themselves for choppy waters on the horizon.  

For more information on the above analysis, please contact:
Matthew Unterman, Director, S3 Partners, LLC    

The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.

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