Boralex breaks into the Top 10 most shorted stocks
Short positions in renewable energy power generation company Boralex (BLX) have been on a steady rise over the past year and as of the October 15th IIROC short report, it is now one of the 10 most shorted stocks on the TSX with 10.04% of its float shorted. Expensive valuations and lofty debt levels might be the bait that is attracting the sharks. The stock trades at a lofty 15.7 Enterprise Value to EBITDA ratio according to Refinitiv data. It also has relatively high debt levels at 4.1 times equity compared to competitors at just over 1.1 times. The short-selling combined with mixed insider commitment levels yields a bearish setup based on INK signals.
In contrast, Innergex Renewable Energy (INE) which also has pricy valuations and relatively high debt levels saw shorts reduce their positions. INE now has a short-squeeze INK signal for those short-sellers that remain. We note that earlier this month Innergex announced it had issued 5,776,795 common shares at a conversion price of $15 per share in relation to a convertible debenture redemption notice issued in September. That may in part explain the short covering in the stock. We also note that INE pays a 4.4% dividend yield compared to 3.0% for BLX.
| Top 10 Canadian Stocks Shorted as of October 15th, 2019* | ||||||
| Stock | Shares Short | %Float | Change | INK Signal | ||
| 1 | POU | Paramount Resources | 8,008,359 | 27.86% | 0.74% | Squeeze |
| 2 | BILZ | Ignite International | 1,882,212 | 15.49% | -4.04% | Bearish |
| 3 | HLF | High Liner Foods | 2,893,267 | 14.05% | -0.61% | Bearish |
| 4 | CJT | Cargojet | 1,712,545 | 13.41% | 0.57% | Bearish |
| 5 | GWO | Great-West Lifeco | 28,788,514 | 13.20% | -0.16% | Squeeze |
| 6 | SSL | Sandstorm Gold | 20,567,703 | 11.78% | -0.17% | Bearish |
| 7 | CHW | Chesswood Group | 965,396 | 10.81% | -0.05% | Bearish |
| 8 | VFF | Village Farms Intl | 4,068,030 | 10.49% | 3.14% | Bearish |
| 9 | NOA | North American Const. | 2,516,520 | 10.24% | -0.60% | Bearish |
| 10 | BLX | Boralex | 8,993,837 | 10.04% | 1.61% | Bearish |
*Stocks trading above $1
Last report's newcomer Ignite International Brands (BILZ) continues to have an elevated short position of 15.49% of its float. On October 4th the company announced plans to offer a combination of convertible debentures and warrants to raise up to $50 million. The deal has yet to close and this cannabis stock continues to have a bearish setup based on a combination of short interest and unremarkable insider commitment.
Meanwhile, Titan Medical (TMD), a non-cannabis Healthcare sector stock that we mentioned last week with a bearish setup, has had a horrible October so far, falling just over 50% as of Friday. The stock is trading Monday at 69 cents, and short positions had increased as of October 15th to an ambitious 20.07% of float. That appears to have worked out well for the short sellers as the company provided an update after the close on October 15th withdrawing previous cost and timing guidance for its robotic surgical system and updating the outlook on several milestones including submission of an Investigational Device Exemption (IDE) application to the FDA which is now "TBD." The medical devices company is still seeking to raise capital to develop its robotic surgical system. The bearish setup signal remains in place.
Titan Medical was identified as having a bearish setup in our last short report
In terms of bullish developments in Healthcare, we note that Well Health Technologies (WELL) has seen its short position drop to 1.29% of its flow, down from 2.23% as of last report. The clinic consolidator has a short-squeeze setup based on INK signals.
As a reminder, we have the most conviction about an INK short signal for a stock when it is consistent with our overall INK Edge outlook. For example, we would pay more attention to a bullish short-squeeze signal when a stock has an overall mostly sunny or sunny INK Edge outlook. For background on our INK Edge outlook, please watch our short video or visit our FAQ #5 at INKResearch.com.