Trading in shares of Bollywood movie distributer, Eros Int’l (EROS US), were halted on Friday afternoon; sinking by as much as 21% after questions arose about its accounting methods.
Bearish bets against the company currently stand at an all-time high when measured on both a notional and share basis. S3 Partners’ real-time short interest analytics computes that the dollars at risk on the short side is currently $134.5 million, with 9.97 million shares sold short. This is an increase of 138% and 92%, respectively, since mid-March when $56.5 million and 5.2 million shares were sold short.
Financing rates to borrow EROS shares to sell short notably spiked Friday afternoon; with new loans being booked at a 10% fee once the shares resumed trading. For the 90 days prior, rates were consistently in the 5% fee range, essentially doubling in cost in just a matter of minutes.
The next catalyst to move the shares will come this Friday, 7/28, when EROS will issue a pre-market press release to report its results for the fourth quarter and fiscal year 2017. Despite bearish speculators currently being down -25.8%, or $19.5 million on an average short position of $75.3 million year-to-date, short interest continues to rise.
Based on this trend, shorts are anticipating the upcoming picture to be full of drama.
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Director, S3 Partners
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