It’s been a brutal past six months for cannabis investors, with the ETF MANAGERS TR/TIERRA XP LATIN AME MJ down another 5.9% this week following a big earnings miss from Tilray Inc TLRY. Tilray carries one of the largest short positions in the cannabis group, but Tilray’s dive has dragged down its cannabis peers as well.
Cannabis Shorts Paring 2019 Losses
On Tuesday, Tilray reported a mixed second quarter and a big earnings miss. As a result, cannabis short sellers earned 269.1 million in profits on Wednesday, according to S3 Partners analyst Ihor Dusaniwsky. He said Tilray short sellers are now up $11.7 million for the month of August and are down just $681.9 million year to date.
Short sellers have aggressively piled into the cannabis space in 2019, with short interest up 95% this year to $5.5 billion.
Short sellers are paying a steep price to bet against cannabis, with the average cost to borrow at 17.7% for cannabis stocks compared to just 0.79% for the overall domestic equity market.
Tilray shares are now down 46.7% year to date, making it one of the few top cannabis stocks that has actually been profitable for short sellers this year. Tilray shorts earned $37.1 million on Wednesday and are now up $62.8 million year to date.
Short Squeeze In Play
Despite the August gains, Dusaniwsky said cannabis short sellers haven’t been cashing out and covering so far in August, with only Aurora Cannabis Inc ACB and Canopy Growth Corp CGC logging significant decreases in shares shorted this month
“With high financing costs, lack of liquidity in the stock borrow market and year-to-date losses the threat of a short squeeze hovers over many stocks in the sector,” Dusaniwsky said.
Here are the five largest cannabis short positions following Wednesday’s volatile session:
- Canopy Growth - $1.39 billion short interest.
- Aurora Cannabis - $925 million short interest.
- GW Pharmaceuticals PLC- ADR GWPH - $671 million short interest.
- Cronos Group Inc CRON - $569 million short interest.
Related Links:
Piper Jaffray Initiates Coverage Of Cronos, Says Stock 'Warrants A Premium Valuation'
Canopy Growth Investors Pull Back As Losses Widen In Q1; CBD Products Coming To US Market
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
|---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
The Benzinga Cannabis Capital Conference is coming to Florida
The Benzinga Cannabis Capital Conference is returning to Florida, in a new venue in Hollywood, on April 16 and 17, 2024. The two-day event at The Diplomat Beach Resort will be a chance for entrepreneurs, both large and small, to network, learn and grow. Renowned for its trendsetting abilities and influence on the future of cannabis, mark your calendars – this conference is the go-to event of the year for the cannabis world.
Get your tickets now on bzcannabis.com – Prices will increase very soon!