Bridgford Foods: The Mother of All Short Squeezes

Bridgford Foods (BRID), a mundane producer of meat and bread products, is apparently the record holder, for the highest short interest ratio ever recorded. A stock’s short interest ratio is calculated by taking its shares sold short and dividing it by its average daily trading volume. It presents the user with the amount of days necessary for a stock’s short position to be covered.

BRID’s short ratio is a staggering 941, meaning it would take 941 trading sessions before its entire short position could be covered. In all my years of trading, I have never encountered a number so high. If you contrast this with AMZN’s short ratio of 2 (one of the most heavily shorted stocks), you will soon comprehend that BRID’s ratio is more than 450 times greater. BRID is the perfect candidate for the mother of all short squeezes since its float, at a very low 1 million shares or 10% of its shares outstanding, creates the perfect setup. This extremely low float makes the supply of shares on the sell side particularly scarce and subject to wild upside swings, as shorts potentially panic cover at any price to end their carnage.

Shorts realize that they must eventually return their borrowed shares and the only way to accomplish this is by buying them back. When there are no shares for sale they can get into trouble really fast. The possibility of a major short squeeze is why some analysts look at a high amount of short interest as a bullish indicator. They construe the short interest as the fuel and performance as the fuse. One piece of good news (performance) out of BRID’s camp could light its fuse and consequently put it into orbit. A potential dose of good news could occur as early as today, when the company is expected to report first quarter results. The shorts are literally sitting on a potential powder keg on this one, waiting to explode. Anyone insane enough to be short this stock needs to call the men in the “white coats” to get them checked into the “Rubber Room” as quickly as possible.

Disclosure: none

Comments

[buddhabill:]

what is the current short interest? Nasdaq's site reports only 28k, (mid feb) with still a large 280 ratio.

And the Nasdaq data shows a relatively stable short position. Has it spiked recently?

Thanks

Mar 09 03:56 AM

[buddhabill:]

update: for a real short squeeze prospect, look to FBP - First bancorp. 23% of shares are short, high short ratio for a stock that trades over 1.5mm shares on average. BRID has no liquidity which explains both the high ratio and why I won't get involved!

Mar 09 04:58 AM