Dillard’s (DDS) Short Interest %: Choose Your Own Adventure

Summary

• There are many estimates of DDS’s short interest as a % of float (SI %) floating on the internet.
• SI % in the ~30% range fails to account for shares held in the retirement fund. Accounting for those pushes SI % to 60%.
• The more adventurous can make additional adjustments (e.g. exclude benchmark-oriented funds from float) that see SI % near the 90% and beyond levels.

Some sites show 31%, others are closer to the 80% range, and some are above 90%.

What the heck is DDS’s short interest as a % of float?

I’ll give you an economist’s answer: it depends. It depends on what you choose to exclude from the float. Choose your own adventure.

You won’t find fancy math, here, today. Just counting. Some call it lowbrow math.

First, the easy stuff out of the way: official short interest figures are published twice a month. The latest data was released on January 27th. It showed that short interest in DDS stood at 4.02MM as of January 15^th.

There are third-party services (S3 and Ortex) that offer estimates of daily short-interest. But I’ll stick to the official figure, even if it’s a little dated (the next update should be released on February 9).

Now we can begin counting shares.

Some housekeeping for the uninitiated: Dillard’s has two classes of shares, a class A and a class B. Only the class A trades (~18MM shares). The total is share count is ~22MM (class B has 4MM shares, which we can disregard for this exercise). From now on, “shares” refer to class A shares.

Next, we count shares held by insiders (employees and directors). Below is the list:

	Shares	As of	Description
Alex Dillard	1,007,692	1/4/2021	President
William Dillard II (after gifting) Gifted shares	927,313 153,170	1/4/2021 12/17/2020	CEO, Chairman Assuming out of float
Mike Dillard	488,273	1/4/2021	Executive Vice President
Drue Matheny (after gifting) Gifted shares	407,333 40,000	1/4/2021 12/28/2020	Executive Vice President Assuming out of float
James Freeman (after gifting) Gifted shares	149,064 2,300	5/16/2020 12/17/2020	Director Assuming out of float
Deborah Dillard	133,124	1/4/2021	Senior Vice President
Stephens Investment Holding	121,536	5/16/2020	Director’s fund
Robert Connor	75,000	5/16/2020	Director
Nick White	58,302	5/16/2020	Director
W.D. Company	41,496	3/19/2020	Insider-owned company
Annemarie Jazic	37,743	1/4/2021	Vice President
Alexandra Lucise Denise	36,339	1/4/2021	Vice President
James Stockman	33,697	1/4/2021	Vice President
William Dillard III	32,062	1/4/2021	Senior Vice President
Stephen Warren (held in trust)	31,032	5/16/2020	Director
Michael McNiff	28,560	1/4/2021	Vice President
Frank Mori	28,272	5/16/2020	Director
Rutledge Reynie	19,600	5/16/2020	Director
Lee Hastings III	18,312	5/16/2020	Director
J.C. Watts Jr.	12,600	12/15/2020	Director
Phillip Watts	9,409	1/4/2021	Senior Vice President
Chris Johnson	8,477	1/4/2021	Senior Vice President
Dean Worley	5,305	1/4/2021	General Counsel
Tony Bolte	3,225	1/4/2021	Vice President
Brant Musgrave	3,195	1/4/2021	Corporate VP Stores
Mike Litchford	2,640	11/3/2020	Vice President
Tom Bolin	1,815	1/4/2021	Vice President
Shares directly held by insiders excluding retirement fund	3,917,156

Excluding those 3.92MM shares from the original share count yields a float of 14.07MM – that’s a short interest % of 29%.

But, as many who are familiar with Dillard’s will be quick to point out, that float does not adjust for the 7.42MM shares held by Newport Trust, the company’s retirement fund manager. Excluding those shares reduces the float from 14.07MM to 6.65MM and increases short interest % by 31%, yielding 60%.

Many who source their data algorithmically will fail to account for Newport Trust because on the surface it looks like any other fund manager – it files a 13F and all. Now, I think a definition of float that does not exclude Newport is incomplete, but that’s me. This is choose your own adventure, after all.

This is probably a good stopping point if you want to stick to the conservative definition of float. It’s easy to forget, with all the talk of SI % above 100% lately, that 60% is quite high already!

But, because there are higher estimates floating on the internet, we can entertain what they may be doing. I am guessing higher estimates are probably making one or more of the following adjustments:

1. Excluding, from the float, shares held by benchmark-oriented funds like Dimensional Fund Advisors (DFA).
2. Excluding, from the float, Ted’s stake of 5%, revealed in an early October 2020 filing.
3. Adding an estimate of shares repurchased after 11/28 (the latest 10-Q).

To be clear, assuming that Ted or ETF-like funds are unlikely sellers in a squeeze is speculative at best. We have no reason to believe that they won’t. And, though it would be consistent with historic trends, we don’t know how aggressively Dillard’s continued repurchasing shares after filing the 10-Q.

That said, it’s the weekend and I am a little bored, cooped up at home. So, here’s the math.

	Shares	As of	SI %	My opinion
Class A Shares	17,987,659	11/28/2020
Less: insider	3,917,156	See table above
= Float	14,070,503		29%	incomplete
Less: retirement fund (Newport)	7,420,197	9/30/2020
= Float	6,650,306		60%	conservative
Less: DFA (benchmark-oriented)*	1,545,139	11/30/2020
= Float	5,105,167		79%	Speculative
Less: Ted Weschler	1,081,000
= Float	4,024,167		100%
Less: a guess of shares repurchased in Q4	600,000
= Float	3,424,167		117%

*Using shares disclosed in DFA’s mutual funds (DFSVX, DFSTX, DFTSX, DFEOX, DFQTX, DFTCX, DTMEX, DFFVX, DFTVX, DFTPX, DTMVX, 233203710) as of November, 30th

Looking at this table, do I think that Dillard’s is susceptible to a squeeze? Yes. But, a word of caution: short-sellers may (and have been, so far – evidenced by the falling short interest) cover in an orderly fashion.

Now you can mix and match the shares you want to include in your definition of float. Mine, if I were pressed, would probably exclude DFA’s stake from the float and account for some repurchase adjustment, but include Ted’s stake (which would come out to a float of ~4.5MM and an 89% SI %).

What does your definition of float look like?