• Research

Mar 2, 2018

S3 Analytics: February’s Most & Least Profitable Short Positions

We tracked $951 billion of short interest in the U.S./Canadian region and the top ten most and least profitable short trades for the month of February were:

Most profitable shorts:
• WMT: After a rally which lasted for all of 2107 and stretched into January 2018, Wal-Mart’s stock price has been declining since it reported quarterly earnings which missed on profits, beat on sales and disclosed 2018 guidance below expectations.  
• TSLA: After hitting $357.42 in late February, Tesla’s stock price began to tumble as it nears its 200,000th vehicle delivery which will mark the eventual phase out of the U.S. Government’s $7,500 tax credit.
• CVS: CVS shares trended lower when the DOJ asked for more details on the CVS-Aetna merger. Even their strong quarterly results, which beat on earnings and sales, couldn’t reverse its 14% price drop in February.
• CMCSA: Comcast’s share price took a hit when they disclosed a potential rival bid for Fox’s media assets, Disney has a $52 billion offer on the table, which would have to be topped.
• AMD: After posting solid quarterly earnings, analysts fear that its crypto-mining based growth may be short lived and tenuous due to increased competition.
• CVX: Chevron quarterly results met revenue expectations, but missed badly on earnings after backing out the effect of $2 billion of tax benefits.
• XOM: Exxon Mobil reported lower than expected quarterly earnings due to a drop in demand for its refining business.
• GOOGL: Alphabet had strong quarterly revenues, but earnings underperformed FactSet estimates by $0.28/share even though overall revenues increased by 24%.
• MDXG: MiMedx is delaying the release of its 4th quarter and 2017 full year earnings until it concludes an internal accounting audit. Later In the month reports arose that the DOJ was investigating the company’s sales and distribution practice, specifically regarding government contracts.
• AKRX: Shares plunged after its acquirer, Freenius SE, announced that it was conducting an investigation into Akorn’s product development policies in relation to FDA date integrity procedures.

Least profitable shorts:
• SNAP: Snapchat stock soared over 20% as its quarterly results handily beat expectations on both revenues and Daily Active User growth.
• GRUB: Yum! Brand (YUM) announced a delivery partnership with GrubHub, extending GRUB’s reach across the country. YUM purchased $200 million of GRUB stock to formalize the agreement.
• NFLX: Netflix signed Ryan Murphy, creator of American Horror Story, to a five year deal. NFLX is slowly inching towards the $300/share level which is increasing buying demand from momentum traders.
• TWTR: Twitter reported its first profitable quarter, beating on both revenues and earnings but disappointing slightly on Monthly Active User growth.
• AAPL: Warren Buffett’s Berkshire Hathaway (BRK) increased its Apple stake in the 4th quarter 2017 to 169.6 million shares or $29.7 billion.
• EBAY: Reported strong quarterly results and decided to end its payment processing relationship with PayPal and replacing it with Dutch firm Adyen. EBAY is looking to not only to reduce its payment processing costs but also control more of its operational footprint.
• LITE: Reported strong quarterly earnings including an increase in overall sales, specifically in its 3D-sensing product line.
• AMZN: Amazon began cost cutting measures with over 100 layoffs in its corporate workforce. Amazon is also looking to expand its retail footprint in the medical supply sector, an extension of its possible foray into the retail drug sector. The firm is also starting its own shipping service to compete with UPS for not only its own deliveries but also for their retail partners.
• MU: Micron Technology reported strong earnings, reporting EPS and sales higher than previous guidance culminating with year-to-date earnings that could hit $10/share.
• QRVO: Qorvo reporting better than expected quarterly earnings with slightly weaker short term guidance but stronger long term guidance.

Want deeper insight into the above analysis? Contact:
Managing Director Predictive Analytics, S3 Partners, LLC
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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