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Do you own any shares in the following companies: Lion Electric Co., Hut 8 Mining Corp., Goodfood Market Corp., TMC The Metals Co. Inc., Peak Fintech Group Inc., Lightspeed Commerce Inc., Flora Growth Corp., Air Canada or Canadian Pacific Railway Ltd?

If so, you may want to double-check your buy-and-hold thesis.

Short-selling activity has recently become elevated in these stocks, which academic studies warn may foreshadow underperformance (in some cases, the short positions may reflect hedging or arbitrage trades and may not be purely bearish signals).

Data-analytics firm IHS Markit tracks revenues generated from securities lending. Since these revenues are paid by short sellers to borrow stocks, they may be viewed as proxies for bearish sentiment on a company.

The Canadian company with the highest amount of loan revenues ($5.6 million) in the third quarter was Lion Electric Co., a Montreal-based manufacturer of electric trucks and buses. It went public in May and is down 14.5 per cent over the last three months. Lion Electric has a contract to supply Inc.

Largest revenues from securities lending (Oct. 25)

Lion Electric CoLEV-T $5,558,523
Aurora Cannabis IncACB-T $3,365,678
Hut 8 Mining CorpHUT-T $3,192,231
Goeasy LtdGSY-T $2,658,419
Goodfood Market CorpFOOD-T $2,374,103
Cineplex IncCGX-T $2,277,926
Tilray IncTLRY-T $1,576,430
Galaxy Digital Holdings LtdGLXY-T $1,442,395
Endeavour Silver CorpEDR-T $1,150,986
Copper Mountain Mining CorpCMMC-T $1,100,061

Source: IHS Markit

Hut 8 Mining Corp., a Toronto-based cryptocurrency miner, also generated a large amount of revenues ($3.1-million) for security lenders in the third quarter. The company says it holds “more self-mined bitcoin than any other publicly traded company,” which may help explain why its stock is up more than 1,200 per cent over the past 52 weeks.

Short sellers also paid a great deal ($2.4-million) to borrow the shares of Goodfood Market Corp., a Montreal-based online grocery that delivers meals to the homes of clients. Goodfood issued convertible debentures in 2020, so short sales of its stock may reflect an arbitrage operation, at least in part.

Breakout Point GmbH monitors activist short sellers. The firm reports that sell recommendations have been issued on 10 Canadian companies by activist short sellers in 2021 so far. For the same period last year, 14 Canadian companies were in their sights.

Two Canadian companies were targeted in the first week of the fourth quarter. One was TMC The Metals Co. Inc., a Vancouver-based company seeking to harvest battery metals from the seafloor. The other was Montreal firm Peak Fintech Group Inc., which operates in China’s commercial lending industry.

Canadian companies targeted by activist short sellers in 2021

TMC The Metals Co. Inc.TMC-TBonitas ResearchOct. 6-19NA
Peak Fintech Group Inc.PKK-TGRIZZLY RESEARCHOct. 43.5NA
Lightspeed Commerce Inc.LSPD-TSpruce Point CapitalSept. 297.5-60
Flora Growth Corp.FLGC-QWhite DiamondAug. 26-51-81
Reconnaissance Energy Africa Ltd. RECO-XViceroy ResearchJun-24-54NA
Cielo Waste Solutions Corp.CMC-XNight Market ResearchMay-21-36NA
Pyrogenesis Canada Inc.PYR-TMariner ResearchApr-28-18-88
Well Health Technologies Corp.WELL-TGRIZZLY RESEARCHApr-24-1-60
Mountain Valley MD Holdings Inc.MVMD-TNight Market ResearchMar. 25-80-100
Exro Technologies Inc.EXRO-TMariner ResearchMar-02-52-94


In the third quarter, short sellers zeroed in on two other Canadian companies. The first was Lightspeed Commerce Inc., a Montreal company selling point-of-sale systems; the second was Flora Growth Corp., a Toronto-based grower of cannabis products.

S3 Partners is another data-research firm that tracks short selling activity. The short position in Air Canada is 27.2 per cent of its float, the highest of all Canadian companies. For several months now, Air Canada (which has issued convertible debentures) has been at, or near, the top of the list of most heavily shorted companies.

Largest percentage of float sold short (Oct. 25)

Air CanadaAC-T27.2%
Aurora Cannabis Inc.ACB-T24.3%
Lion Electric Co.LEV-T19.7%
Sundial Growers Inc.SNDL-Q17.3%
Canopy Growth Corp.WEED-T16.5%
Aurinia Pharmaceuticals Inc.AUP-T16.5%
iShares S&P/TSX 60 ETFXIU-T13.8%
Energy Fuels Inc.EFR-T13.2%
CP RailwayCP-T13.0%
Ballard Power SystemsBLDP-T12.1%
Canadian Solar Inc.CSIQ-Q11.4%
Great West Lifeco Inc.GWO-T11.2%
Lithium Americas Corp.LAC-T11.1%
Cronos GroupCRON-T10.8%
Meta Materials Inc.MMAT-Q10.8%
Boardwalk REITBEI-U-T9.8%
Tilray Inc.TLRY-Q9.5%
Westshore Terminals Corp.WTE-T9.5%
First Majestic Silver Corp.FR-T9.2%
iShares S&P/TSX Capped Energy ETFXEG-T9.0%
Source S3 Partners

Source: S3 Partners

In October, there was an unusually large increase of $3.4-billion in short interest for CP Rail, according to S3 Partners. This position, however, could be due in part at least, to merger arbitrageurs shorting CP Rail’s shares pending approval in early 2022 of its proposed merger with Kansas City Southern.

Largest 1-month increases in short sales (Oct. 25)

CP RailwayCP-T$3,439
TC Energy CorpTRP-T$730
Enbridge IncENB-T$650
Canadian Natural ResourcesCNQ-T$350
Bank of MontrealBMO-T$326
Toronto-Dominion BankTD-T$299
CN RailwayCNR-T$285
Royal Bank of CanadaRY-T$265
Sun Life FinancialSLF-T$244
Brookfield Asset ManagementBAM.A-T$210
Imperial Oil LtdIMO-T$180
Barrick Gold CorpABX-T$176
Manulife FinancialMFC-T$174
Ovintiv IncOVV-T$171
Nutrien LtdNTR-T$170
Suncor EnergySU-T$163
Pembina Pipeline CorpPPL-T$139
Cenovus EnergyCVE-T$126
Kirkland Lake Gold LtdKL-T$118

Larry MacDonald is a semi-retired economist who blogs at

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