September 01, 2022
🧑⚖️ Situational awareness: Sears' four-year Chapter 11 saga concludes after the estate won court approval to settle litigation against former CEO Eddie Lampert and other investors for $175 million.
Programming note: Starting tomorrow, each Friday’s newsletter will be a digest of the week’s top news, providing easy access to all the scoops, deals and analysis we’ve covered since Monday in one spot.
1 big thing: Short sellers step back from consumer discretionary
Why it matters: The findings may come as a bit of a surprise, given that retailers reliant on selling consumer discretionary goods have lowered their forecasts and are addressing inventory issues, Richard writes.
- Some short sellers may believe inflation has peaked, S&P says.
Details: Short interest in consumer discretionary stocks traded on U.S. exchanges represented 5.1% of all outstanding shares as of mid-August — a decline of 52 basis points since June 30.
- It's also the lowest short interest in the sector since mid-February, S&P adds.
- Home furnishing retail, department stores and automotive were the most shorted categories within consumer discretionary, at 13.89%, 10.35% and 9.39% respectively.
- The most shorted stock in the sector is no surprise: 38.6% of Bed Bath & Beyond's shares are sold short.
Of note: "Short interest in Bed Bath & Beyond has risen steadily this year, from 28.46% at the end of December," S&P says.
Yes, and: Consumer discretionary remains the most shorted sector overall, beating out health care, which has short interest of 3.93%, and energy, which has short interest of 3.77%.
The big picture: "The average short interest for S&P 500 stocks was 2.22% as of mid-August, down from 2.31% in mid-July," S&P says.