Under Armour Inc. (UA US & UAA US) reported worse than expected 4th quarter results, lowered future sales guidance and lost their CFO today. As expected, it’s A shares (UAA US) are down 25.5% and C shares (UA US) are down 21.8%.
Total short interest for both the A shares (UAA US) and C shares (UA US) is $1.6 billion up $181 million, or 13%, this year. With Under Armour’s stock price down over 24% short sellers have made over $400 million in unrealized P\L today.
This continues over a year of strong short performance in Under Armour. Short interest averaged $1.9 billion in 2016, but shorts were covering steadily since July of 2016, with year-end short interest down 40% in the second half of the year to $1.2 billion. It cost short sellers $41 million to finance their short positions, but it was well worth it as they made $519 million net of financing expenses, or 27.4%, on their average short positions.
Short interest in 2017 climbed 10% to $1.4 billion. After paying $11 million in stock borrow costs in January, short P\L was down $17.5 million net of financing expenses, or down 1.2%, in January. Today’s gain of $412 million makes January’s new P\L net of financing $395 million, or a gain of 27% in January alone.
Under Armour was the most profitably shorted stock in the Textiles, Apparel and Luxury Goods Sector for the last thirteen months, followed by Nike (NKE) with $196 million in net of financing short profits, and VF Corp (VFC) with $181 million of profits. On the other side of the ledger, shorts were burned by Lululemon (LULU US) with an average of $1.2 billion of shorts losing $293 million net of financing over the last thirteen months. Adidas (ADS GR) was also not kind to short sellers with shorts losing $169 million in the last thirteen months.
For more information on the above analysis, please contact:
Ihor Dusaniwsky, Head of Research, S3 Partners, LLC Ihor.Dusaniwsky@S3Partners.net
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