Soaring shares of Bed Bath & Beyond spark gains in other highly shorted stocks

Value Exchange International

03/11/2021 11:43

Nov 3 (Reuters) - Shares of Bed Bath & Beyond Inc  BBBY.O 
jumped 56.2% in trading before the bell on Wednesday as news of
an accelerated share buyback plan and tie-up with Kroger  KR.N 
reignited the interest of retail investors in the heavily
shorted stock.
    The home products maker was tethered to the meme stocks
phenomenon this year where individual investors coordinated in
online message boards like Reddit and Stocktwits to fuel
eye-popping rallies in certain shares, costing short sellers
billions of dollars.
    If gains hold, it would be stock's best day in about five
months.
    About 29% of Bed Bath & Beyond free float is shorted,
according to financial analytics firm Ortex. The surge in the
company's shares amid high short interest makes it ripe for a
"squeeze" where investors betting against the company are forced
to unwind their exposure to stem losses.
    Other retail darlings GameStop  GME.N  and AMC Entertainment
 AMC.N  added 4.8% and 6.3%, respectively, while Koss Corp
 KOSS.O , BlackBerry  BB.N  and Workhorse Group  WKHS.O  also
advanced between 2.5% and 4%.
    Another highly shorted stock, Avis Budget  CAR.O , doubled
in value on Tuesday to $357.17 after strong results, but slipped
6.6%.
    AMC, Workhorse, Bed Bath & Beyond and Avis were among the
most touted stocks on Stocktwits.
    After a subdued October, the appetite of retail investors
appears to be rising with most of their interest concentrated in
technology stocks, analysts at Vanda Research said in a weekly
note on Wednesday.
    Bed Bath & Beyond on Tuesday announced it would speed up its
$1 billion share buyback program, saying it would complete it by
the end of 2021, two years ahead of schedule. The company also
said it was partnering with Kroger to bring its line of home and
baby products to the grocer's website.
    "The announcements should be received positively by
investors, especially the share buyback, which we estimate has
the potential to reduce the share count by 15% and boost 2022
EPS," Telsey Advisory Group analysts said in a client note.

 (Reporting by Medha Singh and Uday Sampath in Bengaluru;
Editing by Bernard Orr)
 ((Medha.Singh@thomsonreuters.com; within U.S. +1646 223 8780,
outside U.S. +91 80 6182 2802; Twitter: https://twitter.com/medhasinghs;))