S3 Partners Head of Predictive Analytics Ihor Dusaniwsky joins Yahoo Finance Live to discuss Bed Bath & Beyond stock, a looming bankruptcy, volatility across meme stocks, investor sentiment, and the outlook for Apple.
Video Transcript
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JULIE HYMAN: Shares in Bed Bath and Beyond are taking off as potential bankruptcy looms, and speculation of a takeover makes the rounds. Volatility in the meme stock name over the past year made shorting Bed Bath and Beyond a lucrative trade, but what does the short interest picture look like now for the company? For this and more, we have Ihor Dusaniwsky, S3 Partners Head of Predictive Analytics.
Ihor, good to see you. Always good to catch up with you and the great data that you guys provide. So talk to us about Bed Bath and Beyond. Now, we've seen it bouncing for a few days. Has some of the short interest in this name been worked out here?
IHOR DUSANIWSKY: This has been a big short for a long time, and it's really been a really busy short since it hit its recent highs in late March. We saw a 25 million share shortage since then, and another 3.6 million shares shorted in 2023. So shorts aren't going anywhere. And it's one of the bigger, more crowded shorts in the market right now.
BRAD SMITH: Is any type of short covering the event that would really lead a concerted rally next from here?
IHOR DUSANIWSKY: It's really interesting, because we're looking at possibly bankruptcy stocks. So most short sellers are going to hold on. If I got a chance for the stock go down to zero, I'm going to wait for it to go down to zero. That's what they're thinking. What we're also seeing is that while short selling and short interest on the institutional side has gone up around 2/3 over the past year and change, institutional long holding has gone down by around 2/3.
So this is really a retail stock. We've got our [? black ?] app, which just looks at the long side of the market now, and it's showing that active and passive shareholders went from 140 million to only 40 million shares held long. So this is going to be a really volatile stock.
BRIAN SOZZI: Ihor, how long do you think the short squeeze in Bed Bath can continue? For the average investor out there trading, what, almost a $3 stock, what signs should they be looking for?
IHOR DUSANIWSKY: Well, this is an expensive stock to borrow. We're talking about new shares to borrow to cover your short sales going at around 40%. So it's eating your profits up every single day. We're going to see short sellers hold on for a little while longer until the market pops up a little bit, but I don't see the shorts leaving the stock any time soon.
JULIE HYMAN: Ihor, I want to move on to some of the other stocks that you track as well, including the likes of Tesla, which was also enormously shorted last year. Do we see anything different this year? And I also wonder-- the calendar is a construct, et cetera, et cetera, but do we tend to see a clearing of the decks with short interest when we head into a new year?
IHOR DUSANIWSKY: For some of these big names, it's-- the name you love is the name you stay in. Shorts have made-- we're down $15.8 billion in mark to market losses in Tesla the last year. So you would think that most of these guys got out of their trade. But not so much. We've still seen short selling go up in the name, because the stock price keeps going down and-- I mean, sorry, short sellers made $15.8 billion last year. And we're still seeing people shorting the name. Of course, they lost $40 billion since 2010. So they've got a lot to catch up.
BRAD SMITH: For Tesla, it's really the second largest short, just behind-- as our viewers are seeing there on the screen-- behind Apple and Microsoft-- or just ahead Microsoft. So with all of that in mind, for two of the larger tech companies out there-- for Apple to have the amount of shorts that it does-- what does that indicate to you about the sentiment around even big tech or megacap tech, given that it's fallen so far because of the broader market declines-- along with, rather, the broader market declines that we'd seen in 2022? And what would it take for that to reverse course?
IHOR DUSANIWSKY: Apple is an interesting short, because it's not only a fundamental short on the stock, because people are worried about the China exposure and demand for the new iPhones. It's also a short to hedge technical long exposure. So if I'm [? long ?] a big block of technical stock in my portfolio, I can either short using one of the ETFs, or [? some ?] futures, but it's much easier for me to short Apple and have a short that covers some of my long exposure on the long side in one simple name.
So a lot of that is hedging short selling. Ihor, bigger picture here-- if at some point soon we do get a sign of a Fed pivot from the Federal Reserve, what does that mean for the short selling community?
IHOR DUSANIWSKY: December saw a tremendous amount of short selling-- over $90 billion worth of short selling just in December alone. January slowed down a little bit. We see around $10 billion worth of short selling right now. If this market turns around, you're going to see a lot of these shorts that [INAUDIBLE] recently just start covering their position. So you're going to see a little bit of turbocharge [? to ?] [? the ?] rally if the short sellers start buying to cover. So let's wait for the market to go up a little bit, shorts get a little skittish, and then they're going to start [? covering, ?] because they want to realize some of their gains that they had in 2022, and not blow them up in 2023 if the market rallies.
JULIE HYMAN: Interesting. We'll see, though, if any kind of rally can be sustained. Ihor Dusaniwsky, always good to talk to you. S3 Partners' Head of Predictive Analytics. Thanks.
IHOR DUSANIWSKY: Thanks for having me back. Take care.
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Bed Bath & Beyond one of the ‘more crowded shorts in the market right now': Analyst - Yahoo Finance
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