Cannabis stocks remain high as Beyond Meat bows out
14 November 2019 New York
Image: Shutterstock
Beyond Meat has lost its crown as the stock with the highest borrow fee in the US market with its rate falling 42.75 percent to 4.55 percent in November, according to Ihor Dusaniwsky of S3 Partners.
The drop-off represents a 163.5 percent fee decrease since its mid-October high for the Los Angeles-based producer of plant-based meat substitute products.
The stock has maintained its red-hot status for much of the year and has been a rare win for short sellers this year. It was also hailed as the “outstanding security of the year" last month in October by IHS Markit’s Sam Pierson.
But now, according to Dusaniwsky’s website post, there are no “super-hot” stock borrows with a fee over 100 percent at the moment.
However, while lenders are done gorging on Beyond Meat for now, the cannabis sector is remaining a reliable source of lending income.
Stock borrow costs in the cannabis sector are now trending higher than the overall market with three Cannabis stocks in the top 10 and four in the top 25 stocks with the highest borrow fees.
Three of the top six stock with the highest daily borrow costs include Aurora Cannabis leading the pack and the only stock with over $500,000 in daily borrow costs.
“In aggregate, [US] domestic short sellers were paying $16.6 million in daily stock borrow financing expenses last week, equating to $5.99 billion in financing expenses per year,” Dusaniwsky noted.
Elsewhere on the post, Dusaniwsky warned short sellers to take into consideration the cost of the underlying stock borrow as well as the short interest as a percent of float when making their short investment decision.
“High daily financing costs hit a short seller’s bottom line directly, if a stock’s price plateaus the trader will be seeing red financing numbers that are not being offset by daily mark-to-market profits,” Dunsaniwsky said. “If these financing costs are not accounted for properly on a daily basis, what may look like a profitable trade may in actuality be a loser.”
The drop-off represents a 163.5 percent fee decrease since its mid-October high for the Los Angeles-based producer of plant-based meat substitute products.
The stock has maintained its red-hot status for much of the year and has been a rare win for short sellers this year. It was also hailed as the “outstanding security of the year" last month in October by IHS Markit’s Sam Pierson.
But now, according to Dusaniwsky’s website post, there are no “super-hot” stock borrows with a fee over 100 percent at the moment.
However, while lenders are done gorging on Beyond Meat for now, the cannabis sector is remaining a reliable source of lending income.
Stock borrow costs in the cannabis sector are now trending higher than the overall market with three Cannabis stocks in the top 10 and four in the top 25 stocks with the highest borrow fees.
Three of the top six stock with the highest daily borrow costs include Aurora Cannabis leading the pack and the only stock with over $500,000 in daily borrow costs.
“In aggregate, [US] domestic short sellers were paying $16.6 million in daily stock borrow financing expenses last week, equating to $5.99 billion in financing expenses per year,” Dusaniwsky noted.
Elsewhere on the post, Dusaniwsky warned short sellers to take into consideration the cost of the underlying stock borrow as well as the short interest as a percent of float when making their short investment decision.
“High daily financing costs hit a short seller’s bottom line directly, if a stock’s price plateaus the trader will be seeing red financing numbers that are not being offset by daily mark-to-market profits,” Dunsaniwsky said. “If these financing costs are not accounted for properly on a daily basis, what may look like a profitable trade may in actuality be a loser.”
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