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Jul 24, 2017

EROS Short Interest at All-Time High

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.  

Want deeper insight into the above analysis? Contact: 
Director, 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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