Swarming Acacia Short Sellers Reap Windfall From ZTE Ban

(Bloomberg) -- A recent spike in bearish bets against optical-component supplier Acacia Communications Inc. proved prescient on Monday when a U.S. ban on its largest customer sent shares plummeting.

The news caused Acacia shares to fall 36 percent, a boon for short sellers who added to positions in the past few weeks. Short interest in Acacia had jumped to about 35 percent of shares available to trade on Friday, up from 25 percent at the end of March, making it the second-most shorted U.S. technology stock among companies with more than $1 billion in market cap, according to Markit data.

Shares are down as much as 2.5 percent.

The group of small-cap optical stocks have long been favored targets for short sellers who relish their volatility and see stiff competition, customer concentration and uncertain demand from China as weaknesses.

Applied Optoelectronics Inc., Inphi Corp., Finisar Corp. and Neophotonics Corp. are among the most shorted optical stocks, with at least 26% of the free float sold short, according to Markit.

To contact the reporter on this story: Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net.

To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Will Daley, Christiana Sciaudone

©2018 Bloomberg L.P.