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Apr 18, 2017

S3 Research: April 10th – 14th Best and Worst Short Performers

Every week, S3 tracks short seller’s equity positions in the US, revealing the trades that delivered positive results or missed the mark.  After tracking $791 billion worth of short positions, the following is a list of this week’s top five best and worst performing shorts over the week.

Top 5 Shorts:
• TXMD After hitting a year-to-date high on April 6th of $8.09/shares, TXMD received an FDA letter stating it had “identified deficiencies” in its application for a women’s health drug named Yuvvexy. TXMD is down 34% from its recent yearly high. Short Sellers were up $135 million in 2016 but were down in 2017 before this news came out, they are now up $12 million in 2017.
• AMD Following Goldman Sachs’ downgrade stock to “sell” with an $11 price target, AMD was down almost 9% this past week. AMD also bought VR headset company Nitero which analysts are not sold is accretive or necessary for AMD growth in the virtual reality sector. AMD short sellers are still down $80 million in mark to market P/L in 2017.
• NVDA NVIDIA hit a year to date low on April 13th of $95.49, down 10.5% year-to-date, after being up 224% in 2016. This may be a temporary pullback after a long run-up where shorts lost $4.6 billion on an average short balance of $3.2 billion. Shorts are up $230 million in 2017.
• WFC Wells Fargo released the results of an internal probe concerning the firm’s sales practices which concluded CEO John Stumpf and head of regional banking head Carrie Tolstedt were primarily responsible for the scandal. Compensation was clawed back from both officers and WFC has implemented changes to its sales practices. Short sellers were up slightly in 2017 before the news, but now they are up $159 million of mark to market P/L this year.
• AAPL Qualcomm Inc (QCOM US) responded to an Apple lawsuit with counterclaims that Apple breached their contract and misrepresented facts in their agreement which led to regulatory investigations into Qualcomm’s business dealings. Apple continues to be a poor short sale target with short sellers down $403 million in 2016 and down an additional $1.2 billion in mark to market P/L in 2017.

Bottom 5 Shorts:
• STRP STRP shares soared over 150%, closing at $91.70/share after AT&T announced it would acquire the company for $95.63 in an all-stock transaction. The $1.6 billion deal would be a tax-free re-org, which has already been approved by both boards. The acquisition would increase AT&T 5G capacity and make it the largest holder of 5G capable bandwidth in the mobile telephone market.
• WFM Jana Partners, LLC has acquired an 8.3% stake in Whole Foods market and has indicated that they are looking for alternative management strategies and the possibility of a sale in order to unlock shareholder value. WFM short sellers are down $142 million in mark to market P\l for the year.
• CMG Chipotle has launched a new ad campaign, “As Real as It Gets”, to highlight the fact that their food is free of artificial ingredients. This is the first time that Chipotle has used a national ad campaign to bolster its image. CMG short sellers have had a difficult 2017, down $410 million, erasing all of their $355 million in gains from 2016.
• JWN Nordstrom’s stock price has rebounded off its recent year-to-date low of $41.61 on March 23rd as comparable retail stocks such as Bed Bath & Beyond (BBBY US) reported positive earnings. JWN’s strong 3.2% dividend and strong performance of its Nordstrom Rack discount stores has buoyed expectations of a stronger than initially expected revenue performance.
• AAL American Airlines raised its 1st quarter load factor outlook and raised its total revenue per available seat miles (TRASM) from an increase of 1.5%-3.5% to 2%-4%. Short sellers are still profitable in 2017, up $64 million even after this week’s $54 million loss.

Want deeper insight into the above analysis? Contact: 
Head of Research, S3 Partners
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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