Target Shorts Take Big Hit Amid Profitable Earnings Season For Retail Short Sellers

Third-quarter earnings season has been rough for the U.S. retail sector, especially if you happen to be a Target Corporation TGT short seller.

A data breach at Macy's Inc M and a big guidance cut from Kohl's Corporation KSS are two of the lowlights of the earnings season for the multiline retail group up to this point.

Short sellers have been dialing back their exposure the multiline retail group in 2019, with short interest down $876 million to $7.78 billion year to date. However, S3 Partners analyst Ihor Dusaniwsky said Tuesday short sellers have been returning to the retail group ahead of the critical holiday shopping season.

“In the second half of the year we have seen a resurgence of short selling, specifically in Target and Macy’s,” he said.

Short sellers got it right on Macy’s this week, but they dropped the ball on Target.

Target Saves The Day

Target is the single largest short position in the group with more than $1.52 billion in short interest. Based on S3's latest numbers, Target short sellers took roughly a $205 million hit on Wednesday following the company’s 13% earnings-related gain.

The big Target losses for short sellers comes a day after multiline retail short sellers pocketed more than $500 million in gains on Tuesday.

Target losses on Wednesday erased the $35 million in profits multiline retailer short sellers had earned so far in the month of November. These short sellers remain deeply in the red for the full year, down $188.8 million overall even prior to Wednesday's Target losses.

Top Retail Shorts

The following are the five largest multiline retail short positions as of Tuesday:

  1. Target: $1.52 billion in short interest.
  2. Macy’s: $1.46 billion in short interest.
  3. Nordstrom, Inc. JWN: $1.17 billion in short interest.
  4. Kohl’s: $1.05 billion in short interest.
  5. Ollie's Bargain Outlet Holdings Inc OLLI: $617. 9 million in short interest.

Benzinga’s Take

Despite a difficult earnings season so far for retail investors, the SPDR S&P Retail XRT is up 6.4% overall year to date. Retailers like Target, Walmart Inc WMT and Dollar General Corp. DG are proving there’s still life in the brick-and-mortar retail space.

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Posted In: Ihor DusaniwskyS3 PartnersAnalyst ColorShort SellersShort IdeasAnalyst RatingsTrading Ideas

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