Here are the 13 most expensive stocks to bet against

Associated PressFILE – In this Nov. 14, 2019, file photo trader John Elliott works on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EST on Tuesday, Dec. 3. (AP Photo/Richard Drew, File)
  • Betting against some company stocks can be more expensive than owning them.
  • Clovis Oncology, currently the most expensive stock to short, boasts a 109% borrow fee according to data from S3 Partners, a financial analytics firm.
  • Here are the top 13 stocks with the highest borrow fees, according S3 Partners.
  • Read more on Business Insider.

Short selling, or the practice of betting that a stock’s price will fall instead of rise, can be an expensive business.

That’s because the price to borrow shares of some stocks can be more expensive than owning them, data show. For example, traders are currently paying a 109% borrow fee to short shares of Clovis Oncology, according to data from financial analytics firm S3 Partners.

That fee has put Clovis Oncology at the top of the most expensive short list. The company surged into the top spot after its fee jumped 69% in the last two weeks, Ihor Dusaniwsky, the managing director of predictive analytics at S3, wrote in a Tuesday note.

It’s likely that the stock’s borrow fee could climb even higher, Dusaniwsky said. “New stock borrows are going at over 400% fee today as there are very few shares left to borrow. CLVS stock loan recalls are also hitting the street in size,” he wrote.

Borrow fees can be detrimental to traders betting against costly stocks. “High stock borrow costs can eat into expected Alpha making an attractive trade fall below investment thresholds,” Dusaniwsky wrote. “Or an unexpected increase in borrow rates can turn a home-run trade into a run of the mill single.”

Fees can be hundreds of thousands or even millions of dollars each day. Currently, traders are paying more than $US1 million per day in short financing costs on the stock, according to S3.

While right now, it’s the only stock that costs more than $US1 million per day to bet against, that could change soon, said Dusaniwsky.

Two other companies on the list, Nio and Canopy Growth, are seeing borrowing costs rise. “There will probably be a triumvirate of $US1 million borrows in the very near future,” Dusaniwsky wrote. In addition to Canopy Growth, four other cannabis companies are on the most expensive shorts list – Tilray, Hexo, Aurora Cannabis, and Aphria.

Here are the top 13 stocks with the most expensive borrow fees, ranked from least to most expensive according to S3 data.


13. Canopy Growth

REUTERS/Chris WattieA worker collects cuttings from a marijuana plant at the Canopy Growth Corporation facility in Smiths Falls, Ontario, Canada, January 4, 2018. Picture taken January 4, 2018.

Ticker: CGC

Short interest: $US775 million

% float: 20%

Borrow fee: 35%

Source: S3 Partners


12. Ballard Power Systems

ReutersTraders work on the floor at the NYSE in New York

Ticker:
BLDP

Short interest: $US56 million

% float: 5%

Borrow fee: 38%

Source: S3 Partners


11. Aphria

Meranda YslasCalifornia company, Flow Kana, is trying to help small farmers by not growing any of its own weed.

Ticker: APHA

Short interest: $US167 million

% float: 15%

Borrow fee: 44%

Source: S3 Partners


10. Sorrento Therapeutic

ReutersFILE PHOTO: Traders work on the floor at the NYSE in New York

Ticker:
SRNE

Short interest: $US64 million

% float: 18%

Borrow fee: 48%

Source: S3 Partners


9. Aurora Cannabis

REUTERS/Blair GableChemdawg marijuana plants grow at a facility in Smiths Falls, Ontario, Canada October 29, 2019.

Ticker:
ACB

Short interest: $US410 million

% float: 17%

Borrow fee: 52%

Source: S3 Partners


8. AMC Entertainment

AP

Ticker:
AMC

Short interest: $US252 million

% float: 58%

Borrow fee: 55%

Source: S3 Partners


7. McDermott International

Associated PressFILE – In this Nov. 14, 2019, file photo specialist James Denaro, right, works with traders at his post on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EST on Monday, Dec. 2. (AP Photo/Richard Drew, File)

Ticker:
MDR

Short interest: $US95 million

% float: 68%

Borrow fee: 56%

Source: S3 Partners


6. Hexo

ReutersAn employee of the Clever Leaves company shows a cannabis flower at a greenhouse in Pesca

Ticker:
HEXO

Short interest: $US73 million

% float: 14%

Borrow fee: 57%

Source: S3 Partners


5. Nio

Nio

Ticker:
NIO

Short interest: $US514 million

% float: 28%

Borrow fee: 59%

Source: S3 Partners


4. Inmode

ReutersTraders work on the floor at the NYSE in New York

Ticker:
INMD

Short interest: $US103 million

% float: 18%

Borrow fee: 64%

Source: S3 Partners


3. Cel-Sci Corporation

ReutersTraders work on the floor at the NYSE in New York

Ticker: CVM

Short interest: $US50 million

% float: 20%

Borrow fee: 66%

Source: S3 Partners


2. Tilray

ReutersA Cannabis plant is pictured at the ‘Weed the People’ event as enthusiasts gather to celebrate the legalization of the recreational use of marijuana in Portland, Oregon

Ticker:
TLRY

Short interest: $US162 million

% float: 39%

Borrow fee: 67%

Source: S3 Partners


1. Clovis Oncology

Associated PressSpecialists Mark Fitzgerald and Lingbo Jiang work at the post that handles Teva and Cardinal Health on the floor of the New York Stock Exchange, Monday, Oct. 21, 2019. Stocks are opening higher on Wall Street Monday as investors get set for a busy week of earnings reports. (AP Photo/Richard Drew)

Ticker:
CLVS

Short interest: $US468 million

% float: 55%

Borrow fee: 109%

Source: S3 Partners

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