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May 8, 2017

S3 Research: CenturyLink: Corvex vs. Short Sellers

Keith Meister of Corvex Management revealed that his firm has taken a 5.5% stake in CenturyLink (CTL US) at the Sohn Investment Conference today. He sees a 40% upside in the stock after their $34 billion acquisition of Level 3 Communications, which is due to be completed later this year. S3 Partners calculates over $2.47 billion in real money exposure currently at risk on the short side, with as many as 105 million shares now out on loan. Short interest is up 71% on a notional basis (from $1.45 billion), and the amount of shares on loan up 102% (from 51.9 million) examining these same metrics from exactly a year ago. This is a significant amount of capital betting that the Level 3 acquisition by CenturyLink is not going to go as smoothly as Mr. Meister anticipates. Only time will tell who comes out on top of this wager.

Snapshot of S3 Partners’ Real-Time Short Interest over the past 90 days can be seen in the above chart.

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