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Short sellers appear to be exiting Chesapeake Energy (NYSE:CHK), following Carl Icahn out the door after the activist investor halved his stake in the company last week.
- S3 Partners analyst Matthew Unterman estimates CHK short interest has dropped as much as 20% since Sept. 19, to $600M from $750M, when Icahn disclosed his reduced holding to the market.
- As more shares hit lending pools due to Icahn’s long sales, borrow spot rates have hit YTD lows, in contrast to February, when indicative fees hit as high as 50% when the stock price hit its 52-week low of $1.59, Unterman explains.
- "Investors will be watching closely what Icahn’s next move is, as he may be planning on cutting his stake even further now that he has no board representation. And if he does, shorts sellers will realize additional profits," according to Unterman.