One of the most powerful tradable market events is a short squeeze, so traders are always on the lookout for the next short squeeze candidate. S3 Partners analyst Ihor Dusaniwsky has just released a list of potential short squeeze stocks based on their high borrowing rates.
A stock borrow fee is the percentage of a stock’s value that brokers charge short sellers to borrow the stock. If supply of shares to borrow gets low, borrow fees tend to rise.
“While not all stocks with high borrow rates correlate with eventual short squeezes, looking at the pool of stocks with sudden and significant increases in their financing costs is a target rich environment for finding stocks with short squeeze potential,” Dusaniwsy said.
When a stock’s borrow fees spike, it applies pressure to short sellers to choose between closing out their positions or letting fees eat into any potential gains.
Short Squeeze Potential
Here’s a look at the 13 stocks with at least $100 million in short interest that have seen the largest increase in stock borrow fees in the past two week, according to S3 Partners. Two-week increase in borrow fees is included for each stock:
- Zoom Video Communications Inc (NASDAQ: ZM), +49.8% increase.
- Pagerduty Inc (NYSE: PD), 49.3% increase.
- Beyond Meat Inc (NASDAQ: BYND), 21.1% increase.
- Canopy Growth Corp (NYSE: CGC), 17.6% increase.
- Accelerate Diagnostics Inc (NASDAQ: AXDX), 17.1% increase.
- Paysign Inc (NASDAQ: PAYS), 15.3% increase.
- Tellurian Inc (NASDAQ: TELL), 14.8% increase.
- Overstock.com Inc (NASDAQ: OSTK), 14.1% increase.
- Tilray Inc (NASDAQ: TLRY), 8.1% increase.
- Tailored Brands Inc (NYSE: TLRD), 4.2% increase.
- Crowdstrike Holdings Inc (NASDAQ: CRWD), 3.0% increase.
- Cleveland-Cliffs Inc (NYSE: CLF), 2.3% increase.
- Health Insurance Innovations Inc (NASDAQ: HIIQ), 1.8% increase.
Short squeezes are extremely unpredictable, and a rise in borrow fees is not a definitive indication that a squeeze is coming. However, the combination of high short interest and rising fees makes these 13 stocks worthy of being at the top of any short squeeze watch list.
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12 Most Expensive Stocks To Short
Latest Ratings for ZM
|Sep 2019||Initiates Coverage On||Overweight|
|Sep 2019||Initiates Coverage On||Sector Perform|
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