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It’s open season on short sellers these days.

Once they were the hunters spreading fear of the Big Short among corporate executives, but now they are the hunted quarry fleeing the Big Squeeze that rank-and-file investors are laying down in Reddit forums and other social media.

Just a few Canadian companies, notably BlackBerry Ltd. and members of the cannabis sector, have had their stock prices bid sky high by the Reddit crowd to pressure short sellers into buying back shares and close out positions. The short sellers are compelled to cut their losses, but, in doing so, they further bid up share prices, adding to the gains of the Big Squeeze operators.

Are there more short squeezes on the way? What Canadian companies could be targeted?

Leading candidates have high percentages of float sold short. A secondary factor that increases the odds of a squeeze is if the company’s shares also trade in the United States (where small investors are currently most likely to act as a group).

Companies with more than 12% of float sold short

Name SHORT INTEREST AS % OF FLOAT (as of Feb. 11)
Alpha Pro Tech Ltd.APT-A23.6%
Tilray Inc.TLRY-Q22.6%
Westshore Terminals Corp.WTE-T19.2%
VBI Vaccines Inc.VBIV-Q18.8%
Cargojet Inc.CJT-T16.9%
West Fraser Timber Co.WFG-T16.9%
Cronos GroupCRON-T16.1%
Tucows Inc.TC-T15.8%
Village Farms InternationalVFF-T15.4%
Achieve Life Sciences Inc.ACHV-Q14.4%
Hexo Corp.HEXO-T14.2%
Energy Fuels Inc.EFR-T14.1%
Canada Goose HoldingsGOOS-T13.5%
Aurora Cannabis Inc.ACB-T13.4%
Canopy Growth Corp.WEED-T12.7%
Medipharm Labs Corp.LABS-T12.5%
Lions Gate EntertainmentLGF.A-N12.4%

Source: S3 Partners

Includes U.S. short sales (converted to CAD)

For this exercise, data-analytics firm S3 Partners has provided the Globe and Mail with measures of the percentage of float sold short. Float is defined as the number of shares outstanding less the blocks restricted from trading – for example, shares held by employee stock ownership plans or by company insiders when lock-up periods are in effect.

The measure of the percentage of float short may vary across data providers because of differences in methodology. For example, S3 Partners includes in its float count those shares that were bought from short sellers. Other data providers don’t include them, leading to anomalies such as more than 100 per cent of the float count being sold short (as appeared to be the case with several of the squeezed U.S. companies, particularly GameStop Corp.)

Many companies have appeared regularly in recent months on the list of companies with the highest percentage of float sold short. Several, including Alpha Pro Tech , Westshore Terminals and Canada Goose Holdings have been discussed in previous Short sales on the TSX columns.

VBI Vaccines Inc. only recently began showing up on the table. It is working on developing a pan-coronavirus vaccine that will treat not only COVID-19 but also its variants such as SARS.

A single vaccine for the different variants of COVID-19 certainly has its appeal but there are doubters who believe VBI Vaccines will not be successful in reaching this goal. One of the more vocal skeptics is investigative investment research firm Culper Research. In June, it issued a critical research report on its website.

Cargojet Inc. makes a rare appearance on the list of companies with the highest percentage of float sold short. This may be a surprise to many investors: its domestic air cargo services are much in demand because of the secular rise in e-commerce activity and, more recently, the jump in parcel and package deliveries caused by the COVID-19 pandemic.

But the doubling in share price over the past year has made Cargojet’s valuation rich – just as competition heats up with the entry of Air Canada into the cargo market. In addition, the COVID-19 tailwind that has recently boosted air shipments could be close to winding down.

INK Research also reported in late December that senior executives sold more than US$100-million of their stock holdings in the month after the announcement by Pfizer Inc. of positive results for its COVID-19 vaccine. On Feb. 1, the company closed an offering of shares at a price of $213.25 for gross proceeds of $350.2 million.

Lastly, it will be noted that many of the entries on the table are from the cannabis sector. They have already experienced a squeeze that triggered a great deal of short covering – as evidenced by the large year-to-date declines in the percentage of float short and cost to borrow. But short positions nonetheless remain elevated in the sector, even though the United States appears to be moving toward decriminalizing cannabis at the federal level now that the Democrats control legislative and executive functions of the U.S. federal government.

Short covering in the cannabis sector (year-to-date)

Canopy Growth Corp.WEED-T12.7%26.4%0.9%51.9%
Tilray Corp.TLRY-Q22.6%47.6%7.8%59.0%
Aphria Inc.APHA-T7.4%15.7%1.2%36.5%
Aurora Cannabis IncACB-T7.4%19.2%5.3%31.2%
Cronos Group IncCRON-T16.1%37.4%1.3%7.5%
Top 20 companies14.9%24.7%4.1%30.8%

Source: S3 Partners

Larry MacDonald can be reached at

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