• Research

Apr 5, 2017

S3 BLACKLIGHT: Panera Bread Takeover Burns Short Sellers (UPDATED)

Panera Bread Company A (PNRA US) was up 7.93% on April 3rd on a Bloomberg report that it was considering selling itself after receiving takeover interest from an unidentified buyer. PNRA’s stock price rose $20.76, to $282.63, blowing past its average analysts target price of $256 but gave back some of those gains on April 4th with the stock closing at $274. This morning JAB Holding Co. (private company) offered $315/share, or $7.5 billion, for PNRA to add to its Keurig Green Mountain, Caribou Coffee and Peet’s Coffee & Tea breakfast holdings and PNRA’s stock price opened up $37 to $311.

Short sellers have been slowly accumulating positions in PNRA since the beginning of 2017 with short interest now up $512 million for the year, or 102%, to $1.01 billion. Short interest had averaged $521 million in 2016 and traded in a relatively narrow range of $465 - $635 million for the second half of the year. Short conviction picked up in 2017 and broke through the $700 million level for the first time in February and $800 million in March. Short interest continued its $100 million per month climb by breaking through $900 million on the first trading day in April and with today’s JAB takeover offer short interest has now climbed over $1 billion.

Short sellers were down 5.47% in 2016, losing $28.5 million on an average short position of $521 million. With PNRA rallying almost 52% in 2017, short sellers have incurred a much larger loss this year. Including this week’s price moves, short sellers are down $340 million, on an average short position of $701 million for a negative return of 48.55%. PNRA shorts are down $165 million this week alone.

There is still plenty of stock left to borrow in PNRA, so there is very little chance of a short squeeze based on stock loan recalls. But with the stock up 19% this week, and the JAB acquisition on solid ground, short sellers may be ready to close out their position before PNRA’s stock price hits JAB’s $315 offer price. We can expect a considerable portion of the 3.2 million short shares to be bought back in the very near future, pushing PNRA’s stock price closer to JAB’s $315 offer.


Want deeper insight into the above analysis? Contact: 
Ihor.Dusaniwsky@S3Partners.net
Head of Research, 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.


To learn more about S3 Short Interest data, BLACKLIGHT Treasury Management, and Counterparty Risk Solutions, click here

To trial the S3 BLACK APP – the Definitive Source of Real-Time Short Interest - type APPS BLACK <GO> on the Bloomberg terminal