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Sep 18, 2017

S3 Analytics: Kroger Short Interest at an All-Time High – and Looks to Keep Rising

Trading in shares of the largest traditional grocer, Kroger (KR US) continue to be under significant pressure from short sellers.  Bearish bets against the company continue to increase and currently stand at an all-time high when measured on both a notional and share basis.  S3 Partners real-time short interest analytics calculates that the real time dollars at risk on the short side is currently $1.43 billion, with 66.4 million shares sold short.  This is an increase 151% and 301%, respectively, since the beginning of 2017 when $571 million and 16.5 million shares were sold short.  Just in the past 2 weeks alone, S3 Analytics estimates that SI increased 9% (since Aug. 31st).

Despite the elevated levels of Short Interest, only 7.50% of the float is being utilized.  This translates into a large pool of stock available for borrow that gives investors the capacity to add to their conviction.  During the past 8 1/2 months, Short Sellers would have seen Total Profitability on their trades, of $289 million (a 40.5% return). 

Total short interest in the Food Retail sector is now $3.5 billion and has increased $135 million over the past month.

Last week Kroger announced their plans to open a new restaurant concept, Kitchen 1883.  Kitchen 1883 will open its first location in Union, KY where they will offer a menu of “New American Comfort” food and drinks.  Although opening one restaurant (to start), has very little downside risk to a company the size of Kroger, this might give nay-sayers one more reason to increase shorts.

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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