S3 Partners Head of Research Ihor Dusaniwsky highlights the challenges facing determined short-sellers in Wayfair (NYSE: W), as the company's shares have delivered superior performance, up 119% year-to-date, despite a challenging retail sector and online competition from Amazon (NASDAQ: AMZN).

Bearish speculators appear committed to the short-thesis in Wayfair, increasing their short exposure 63% in 2017 to $665 million, making the company the sixth largest short position in the U.S. Internet and Catalog Retail group. During the first quarter of 2017, shares short and notional interest increased, but that trend stopped as traders approached the $600 million short-interest threshold. In fact, shares short have decreased 27% overall in 2017, as the cost to finance them has increased to $75 from $35.

Mark-to-market losses for short operators sits at $509 million, with Wayfair trading just 3.26% off all-time highs. Yet, bearish traders are not throwing in the towel, appearing to only manage their exposure, as they hope to navigate any takeover speculation from names like Wal-Mart (NYSE: TGT), Target (NYSE: TGT), Lowes (NYSE: LOW) or Home Depot (NYSE: HD), that would provide a catalyst for higher prices in Wayfair.

Source: www.s3partners.net