A New Short Squeeze

Stocks have broadly moved higher this month, and of Russell 1,000 members, one stock has left the rest of the index far behind. Month to date, the single best-performing Russell 1,000 member has been Avis Budget (CAR). The stock is up over 130% MTD, whereas the next best performer, Astera Labs (ALAB) (ALBA), is up by not even half as much (49%).  We noted the vehicle rental firm in a couple of X.com posts (here and here) in the past 24 hours. The rally has been driven in part by a short squeeze as the stock has more than half of its shares sold short, as we will detail further below.

In a post yesterday, we highlighted how the S&P 500 recently snapped a seven-day winning streak while several individual members of the index have gone on historic winning streaks in their own respects. Given its monumental run, CAR can also be added to the list of winning streaks. As shown below, assuming it closes higher on Tuesday, it would be its tenth consecutive daily gain.

Again, the rally in CAR is in all likelihood a short squeeze.  Short interest data as of the end of March was published last Friday, and those readings showed 54% of the float in CAR sold short. On that basis, it is the most heavily bet against stock in the Russell 1,000. Additionally, CAR appears to be the only heavily shorted name getting squeezed. In the table below, we show the 25 stocks with the most short interest in the Russell 1,000, and while a small majority are higher MTD, none are even close to the rally in CAR, nor is such a large share of float shorted. For example, Fermi (FRMI) started the year with a reading above 70%. That share is down to 46.6% as of the most recent data, as the stock has fallen 32.7% since the start of the year.

Below, we show average short interest readings for all members of each industry group in the Russell 1,000.  Due to CAR, the transportation industry is the fifth most heavily shorted group, although if that stock were removed, the industry would rank in the middle of the pack.  A related industry is in a similar boat. The Automobile and Components industry ranks as the highest average short interest level at 9.6%. However, this is again due to some members being much more heavily shorted than others, namely: EV-focused stocks. Whereas legacy auto OEM and parts retailers have low to mid-single digit short interest levels, EV stocks have readings in the mid-teens and upwards of 30% for the most heavily shorted name: Lucid (LCID).  LCID is also the third most heavily shorted stock of all Russell 1,000 members. Additionally, we would note that these EV names do have one exception. Tesla (TSLA) is actually the least shorted stock in the industry, currently below 2% per the most recent print.