UA Stock's Popularity With Short Sellers Causes Rise In Prices
Under Armour (UA) has become “one of the hottest stocks for short sales on Wall Street in recent months,” as 37% of the company’s stock, or 10.5 million shares, is owned by short sellers, according to Andrea Walker of the Baltimore SUN. The percentage does not include shares owned by company insiders. In Bloomberg News’ July ranking of companies with over 10% of shares available for short trading, UA ranked 25th among those with the largest amount of short sales on the NYSE. However, UA’s stock "reached a record high" of $67.10 last Thursday and is up about 32% so far this year. Institutional investors have been buying the stock and are “satisfied with the business fundamentals of the company and aware of its popularity among athletes and non-athletes alike.” Analyst Phil Erlanger: “The short interest has progressively grown higher even as the stock has stayed in the upper echelons. For whatever reason, the market is telling the short sellers they’re wrong.” But Morningstar analyst Brady Lemos said, “I just think over time it’s going to be difficult to sustain the type of growth they have now.” Walker noted UA’s sweat-resistant clothing “isn’t patented and, therefore, not as resistant to competition.” Also, the company is entering “categories with lower gross margins, including footwear” (Baltimore SUN, 8/12). At presstime, UA was trading at $65.31, down 1.58% from Friday's close of $66.44 (THE DAILY).
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