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.