Potential short squeeze plays gained steam in 2021 with new retail traders looking for the next huge move.
A short squeeze can occur when a heavily shorted stock rises in value instead of falling. Short sellers could be looking to close out their position and can face a loss if they have to buy back the shares they initially borrowed at a higher price.
A squeeze can occur when short sellers are forced on buying in to cover their position, which has caused shares to go much higher on many occasions.
Fintel Data: Data from Fintel, which requires a subscription, provides a look at several of the top shorted stocks and data showing how likely a short squeeze is to occur.
This week’s leaderboard includes only one name from last week’s top five and a new name to the list that recently announced a major merger.
Here’s a look at Fintel’s top five short squeeze candidates for the week of Jan. 3.
1. Insignia Systems: Digital advertising company Insignia Systems, Inc. ISIG tops the short squeeze leaderboard to start the 2022 trading year. Raw short interest in ISIG is up more than 2,500% from the last reporting period and Fintel shows 61.6% of the company’s public float short. The cost to borrow on shares is 556%, which is the highest Fintel has seen in recent history. The high short percentage and cost to borrow could make the stock an ideal candidate for a short squeeze.
2. American Virtual Cloud Technologies: IT solutions provider American Virtual Cloud Technologies Inc AVCT ranks second on the short squeeze leaderboard for the week. Around 11.5% of the public float is shorted and Fintel shows short interest up over 3,400% from the previous report. The reported cost to borrow on AVCT shares is 191.7%, which is among the highest on the list.
3. Petros Pharmaceuticals: Men’s health pharmaceutical company Petros Pharmaceuticals Inc PTPI is the lone carryover in the top five ranked stocks and remains in third place on the leaderboard. Fintel reports 24.4% of the total float short, up from last week’s 17%. The cost to borrow on shares of 176% is down from the last three week’s reported 268%, 254% and 240%, respectively. The stock previously topped the leaderboard for several weeks.
4. SeaChange International: Multiscreen video solutions company SeaChange International Inc SEAC made headlines when it announced recently it would merge with video provider and TikTok competitor Triller. Short interest in SEAC is up 751% from the prior report, which Fintel points out could indicate increased negative sentiment by short-sellers. The cost to borrow on SEAC shares is 24.4%, which is the lowest on the leaderboard. Fintel reports 13.1% of the SEAC tradeable float short. The stock could be one to watch with its first appearance on the leaderboard with the pending merger.
5. Ensysce Biosciences: Clinical stage biotech company Ensysce Biosciences Inc ENSC is seeking to bring tamper-proof opioids to market. The company is ranked fifth on the Fintel short squeeze leaderboard. Fintel shows 10.9% of the total float short with raw short interest up 702% from the previous report. The cost to borrow on ENSC is 211.8%, which is among the highest for the week.
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