Beyond Meat Inc (BYND) and Dunkinâ€™ Brands Group Inc (DNKN) have partnered to introduce the Beyond Sausage Breakfast Sandwich joining Burger Kingâ€™s Impossible Whopper as a plant-based meat alternative fast food menu item. BYND is up almost 10% in late afternoon trading and short sellers are getting the non-meat sweats as they are down -$112 million in mark-to-market losses on the news.
BYND short interest is $1.1 billion; 5.42 million shares shorted; 46.22% of float; and a 133% stock borrow fee. In less than 3 months since its IPO, BYND has become the third largest short in the Packaged Foods and Meats Sector.
By the end of May, BYND shares shorted hit the 5.4 million share level and much like its retail burger patties, supply started to dry up. Since May 31st, shares shorted have only increased by 11 thousand shares, +0.20%, but stock borrow rates have increased by 80%. With virtually no stock borrow availability left, short sellers have not been able to build their positions, but existing stock borrow costs continue to climb and take large bites out of their potential net alpha.
Surprisingly, with stock borrow rates consistently over 100% fee since June, and BYNDâ€™s stock price up over 105% we have not seen a mass exodus on the short side. BYND shorts\longs, are becoming more cultish and similar to TSLA shorts\longs and hold strong convictions on both sides of the supermarket aisle. As you can see in the charts, neither stock price or borrow rate increases have pushed shorts out of their positions.
BYNDâ€™s stock price closed up almost 10% today and short sellers were down -$112 million in mark-to-market losses. Todayâ€™s trading pushes year-to-date mark-to-market losses nearer to the billion dollar loss level, with BYND shorts down -$956 million in mark-to-market losses.
Short sellers are facing the specter of a short squeeze from three different sides. BYNDâ€™s post-IPO rally is causing mark-to-market losses which are getting harder and harder to digest. High stock borrow fees due to an exhausted stock borrow supply has tacked on $164 million in financing costs, which has dramatically decreases net of financing expected Alpha. And finally, stock recalls have been hitting the street in size for over a week. While Prime Brokers have been working furiously to protect their clients form the bulk of the recalls, there are very few rocks to look under for replacement stock borrows and short sellers will feel the full brunt of the new recalls over the next few weeks.
If BYNDâ€™s stock price continues to soar, stock borrow rates continue to increase, and recalls keep hitting the street we will see an epic BYND short squeeze in the very near future.
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Managing Director Predictive Analytics, S3 Partners, LLC
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