Investing

Short Sellers Keep Attacking the 11 Companies That Have Totally Lost Control of Their Narratives

Jon C. Ogg

Published: September 13, 2017 11:20 am

Last Updated: January 12, 2020 8:13 am

Short sellers are an interesting lot in the field of investing. After all, if they are not hedging a position then they are betting that the price of a stock is going to fall. It almost feels un-American. But what about the class of companies that have no control over their stories and those that are floundering?

Many great American companies have risen to become behemoths over the decades. Sometimes those great companies stumble, and then some of them keep stumbling to the point that investors refuse to listen to what management says. This is what the media would refer to as a case of losing control of their narratives.

24/7 Wall St. tracks the short interest reports in many companies and in many sectors, but the one trend in companies that have lost control of their narratives is that short sellers have continued to keep very negative views of the companies. Even those few that might be staging a recovery have strong bets against them by short sellers.

We have featured the ongoing woes of these companies, but here is how their short interest looked at the end of August versus the prior short interest reading dates. Some of these companies have started to come under the microscope of value investors, but some are likely to be stuck and are nothing more than value traps.

AutoZone Inc. (NYSE: AZO) saw its short interest remain high despite a 1.7% drop to 2,129,336 shares short as of August 31. This represents about 7.6% of its entire float and would take about five days to cover. AutoZone shares were up almost 3% at $567.40 on Wednesday, but its 52-week range of $491.13 to $813.70 might show just how painful this has been. With a market cap of about $16 billion, this company’s shares are down 30% from the 52-week high, despite the bull market having major indexes at record highs.

Bed Bath & Beyond Inc. (NASDAQ: BBBY) remains a target for short sellers, and they became even more aggressive than before. Bed Bath & Beyond’s short interest was almost 18.1 million shares at the end of August, up from 16.1 million mid-month and representative of almost nine days to cover. This was the highest nominal short interest in over a year.

Chipotle Mexican Grill Inc. (NYSE: CMG) was recently given an insulting analyst downward call, but the end of August short interest was more or less steady at 4,804,363 shares. That still represents about 17% of the float, with four days to cover. With shares at $309.75 on last look, Chipotle is still only a few percentage points above its multiyear low of $296.00.

Ford Motor Co. (NYSE: F) saw its short interest tick higher to 123,799,222 shares as of the end of August, up 1.4% from the 122,131,797 shares short two weeks earlier. That represents 3.2% of Ford’s float and would take about four days to cover.

General Electric Co. (NYSE: GE) remains beaten down among the conglomerates and industrials, and some analysts feel that the less-than $25 stock prices may now be more of the norm rather than a floor. Still, GE’s short sellers have backed off despite a high nominal short interest. GE’s short interest of 100,047,185 at the end of August was down over 5% from the 105,639,708 shares short in mid-August. With share at $24.05, GE has a 52-week range of $23.58 to $32.38.

Harley-Davidson Inc. (NYSE: HOG) has found itself in a place where selling more and more motorcycles is harder and harder. Trading at $47.12 now, Harley has a 52-week range is $45.53 to $63.40. Harley-Davidson’s short interest of 24,077,302 shares at the end of August was up over 5% from the 22,871,941 shares short in mid-August.

International Business Machines Corp. (NYSE: IBM) remains a challenged tech giant, with declining core sales still outweighing its growth initiatives. IBM’s short interest was 21,487,538 on August 31, up 5% from the 20,461,407 shares short in the middle of August.

Macy’s Inc. (NYSE: M) has suffered as the poster child of brick-and-mortar retail erosion from online sales pressure from Amazon and rivals. Short sellers added more pressure on the company’s stock in August, with the short interest rising 8% to almost 38.5 million shares at the end of the month from the 35.55 million shares short on the previous settlement date. This was almost 13% of the Macy’s float.

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Mattel Inc. (NASDAQ: MAT) remains a battered toy maker, and the short sellers smell more blood in the water. The August 31 short interest of 43.159 million shares would take more than eight days to cover, and it was up from 38.5 million shares two weeks earlier. Mattel set a two-in-a-row trend for having its highest short interest in over a year.

Under Armour Inc. (NYSE: UAA) was just given another downside analyst call this week, and its shares remain pressured in a challenging sports apparel market. Under Armour’s short interest of 52,259,065 at the end of August was up over 1% from the 51,623,580 shares short mid-month. What stands out here is that this was 28.6% of the entire Under Armour float. The other Under Armour share class, under the old UA ticker, saw the short interest rise 6.6% to 34.76 million shares, or 19.1% of its float.

Urban Outfitters Inc. (NASDAQ: URBN) shares have recovered handily from their lows, and its stock price has risen from under $17 to over $23 in the past month alone. Short sellers have been fighting this trend, with the short interest reading of 23.2 million shares at the end of last month representing a gain of almost 4 million shares from mid-August. Urban Outfitters racked up its highest short interest in a year, and it was more than double the levels of a year ago.