Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Academic research has found that short-sellers are “informed traders who predict future bad news, negative earnings surprises and downward revisions in analyst earnings forecasts,” to quote Professor Ferhat Akbas and his co-authors of a 2013 paper, Short Interest, Returns, and Fundamentals.

Therefore, if you own shares in any of the following heavily shorted Canadian companies, perhaps you may want to double-check your bullish hypothesis. Or, if you are into short-selling, perhaps these present an idea or two to investigate.

The first table lists the 10 companies with the highest percentage of their float sold short, as of Dec. 17. Financial-analytics firm S3 Partners has provided the data for the tables in this article.

Story continues below advertisement

The 10 stocks with the highest % of float sold short

COMPANYTICKERSHORT INTEREST AS A % OF FLOAT
Cronos Group Inc.CRON-T34.90%
Tilray Inc.TLRY-T32.10%
Canada Goose Holdings Inc.GOOS-T29.40%
Canopy Growth Corp.WEED-T24.60%
Tucows Inc.TC-T22.20%
Bonterra Energy Corp.BNE-T20.80%
Seabridge Gold Inc.SEA-T19.30%
Aurora Cannabis Inc.ACB-T18.20%
Hexo Corp.HEXO-T17.80%
iShares S&P/TSX Capped Energy ETFXEG-T17.70%

S3 Partners

For interlisted stocks, U.S. trades are included in the totals (after converting to C$). Float = shares not closely held by long-term shareholders, such as employee-ownership plans.

The majority of companies in the table have carried over from the past month, with the cannabis sector again claiming half the spots. The composition and ranking of the cannabis firms has changed somewhat to Cronos Group Inc., Tilray Inc., Canopy Growth Corp., Aurora Cannabis Inc. and Hexo Corp.

Tucows Inc. has been one of the more regular inclusions on the table. It also has been targeted in research reports by activist short-sellers, notably Copperfield Research in 2018 and Kerrisdale Capital Management in June of 2019. The bearish thesis is that Tucows will be challenged by the transition from its legacy domain-registry and mobile-phone businesses to its new business in the fibre-optics sector. Tucows’s share price has been volatile but is currently trading close to its level from two years ago.

One of the newcomers on the table is the iShares S&P/TSX Capped Energy ETF, with 17.7 per cent of its float short. The gloomy sentiment in the oil-and-gas sector still lingers as it deals with a perfect storm of low-carbon policies, adoption of electric vehicles, sluggish rates of economic growth, increased natural-gas supplies from fracking firms and delays in rolling out new pipelines.

Absent from the table is the iShares S&P/TSX 60 Index ETF. It made the table last month with 20.9 per cent of its float short, but that proportion has fallen to 16 per cent. Given this fall’s resumption of the 10-year bull market in stocks, it would seem some short-sellers have gone into capitulation mode.

The next two tables show companies with the largest short positions and three-month change by dollar value. They screen out companies with less than 5 per cent of float short because a large short interest by itself may simply reflect a large number of shares trading, not necessarily bearish sentiment.

The 5 stocks with the largest short interest

COMPANYTICKERSHORT INTEREST ($-MIL)SHORT INTEREST AS % OF FLOAT
CIBCCM-T$2,634.40 5.40%
Canopy Growth Corp.WEED-T$1,441.20 24.60%
iShares S&P/TSX 60 Index ETFXIU-T$1,407.10 16.00%
Pembina Pipeline Corp.PPL-T$1,269.90 5.20%
Loblaw Companies Ltd.L-T$903.10 7.50%
Great-West Lifeco Inc.GWO-T$888.50 9.80%

S3 Partners

Table shows only companies with at least 5.0 per cent of float short. For interlisted stocks, U.S. trades are included in the totals (after converting to C$). Float = shares not closely held by long-term shareholders, such as employee-ownership plans.

The 5 stocks with the largest increases in short interest

COMPANYTICKER3-MONTH INCREASE IN SHORT INEREST ($-MIL)SHORT INTEREST AS % OF FLOAT
First Quantum Minerals Ltd.FM-T$223.73 6.80%
CIBCCM-T$137.81 5.40%
Aurinia Pharmaceuticals Inc.AUP-T$133.69 11.30%
Northland Power Inc.NPI-T$130.62 6.50%
Stars Group Inc.TSGI-T$122.00 9.10%

S3 Partners

Table shows only companies with at least 5.0 per cent of float short. For interlisted stocks, U.S. trades are included in the totals (after converting to C$). Float = shares not closely held by long-term shareholders such as employee-ownership plans.

One of Canada’s Big Five chartered banks, CIBC, shows up on both tables. For many years now, short-sellers have targeted the Canadian banks, believing that a tumble in housing prices was on the way, which would trigger a jump in loan-loss provisions. CIBC attracts more than its share of short-selling due to its greater exposure to the domestic economy.

Short squeezes

Occasionally, a large short position may spark a short squeeze (an upward spike in the price of a stock, caused by short-sellers rushing to buy back the shares they borrowed). A way to assess this possibility is to check insider trading (source: INK Research); if executives and directors are buying shares, a squeeze could be more of a likelihood.

Story continues below advertisement

As it turns out, only one of the firms, Bonterra Energy, saw significant insider buying. The chief executive officer purchased $2.2-million worth of stock during the past year (with no offsetting sales by other insiders). The stocks with the largest short positions and three-month increases (by dollar value) shouldn’t be at too much risk of a squeeze given that the percentage of their float short is not inordinately high (Canopy Growth excepted).

Convertible securities

A short position may overstate bearish sentiment if it is to hedge, in part or whole, a long position in a convertible debenture or other such security issued by the company. This could be the case in the cannabis sector, where several firms do have convertible securities in their capital structure – although the generous conversion features and dilution potential could incentivize bearish, as opposed to hedging, short positions. Northland Power has a convertible bond, but it is a small one.

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies