Under Armour (UA) Shorts Have Big Day as Footwear & Athletic Apparel Targeted for Downside - S3
S3 Partners Director of Predictive Analytics Ihor Dusaniwsky provides insight into short-interest positioning in the Footwear & Athletic Apparel group, highlighting Nike Inc. (NYSE: NKE), Under Armour Inc. (NYSE: UAA), VF Corp. (NYSE: VFC), Hannesbrands Inc. (NYSE: HBI) and Lululemon Athletica (NASDAQ: LULU) as the top five shorts in the industry.
While Nike remains the largest short-position in the group, bearish speculators have profited most from bets against Under Armour, with the company's "A" shares (NYSE: UAA) down 19% and "C" shares (NYSE: UA) down 18% in today's session, following news management cut 2017 revenue growth outlook during the Q3 earnings report. The news helped shorts generate over $250 million in mark-to-market profits today, improving 2017 year-to-date gains to $936 million.
Dusaniwsky offers more commentary on growing bearish bets in the Footwear & Athletic Apparel industry, noting "short selling in the Footwear and Athletic Apparel sectors has been increasing recently, with short interest in the top ten shorts increasing by $787 million in October. Most of the top shorts in the sectors have seen increased short selling over the last month. Under Armour’s poor results may be a signal to further weakness in the sector and even more short selling. Today’s sector price weakness is offsetting some of this year’s earlier sector short losses, and if stock prices continue to trend downwards, we should see more short selling as short conviction becomes even stronger."
This trend is evident in today's trading as, despite 52-week new lows in Under Armour, shorts continue to press bearish positions, adding $54 million in short-interest exposure during the morning session.