Investors Hoping to Short Tilray Find ‘Cupboards Are Bare’

(Bloomberg) -- Investors hoping to short Tilray Inc. may be out of luck as there are hardly any shares available to borrow, according to financial analytics firm S3 Partners.

The pot stock’s short interest currently stands at $265 million or nearly 20 percent of the company’s float and investors looking to borrow the stock are finding “the cupboards are bare,” S3 managing director Ihor Dusaniwsky wrote in an analysis. This is leading to stock borrow fees as high as 110 percent on the new “miniscule” short sales that are being approved.

Tilray’s short interest increased steadily in the fourth quarter of 2018 to a high of 3.86 million shares, then declined somewhat in January. Since then, short sellers have been “sitting on their hands,” S3 said. The stock is little changed in 2019, down 0.8 percent since the beginning of the year through Monday’s close. It full a further 1.3 percent in early trading Tuesday.

“With recalls hitting the street and stock borrow rates rising, we should see the shorts with less conviction shaken out of their Tilray short trades.” That means shorts “will not be a factor in Tilray’s stock price for the foreseeable future unless new lendable long inventory hits the stock loan market,” Dusaniwsky wrote.

To contact the reporter on this story: Kristine Owram in Toronto at kowram@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Scott Schnipper, Richard Richtmyer

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