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Short sellers may have been right about Lululemon (LULU), but may have been wrong in their timing of it

|Includes: Lululemon Athletica Inc. (LULU)

Lululemon (NASDAQ:LULU) was a popular short selling trade in 2010, but the stock price more than doubled during the year from $30 to almost $70.  Short sellers put on a huge position on March 10, 2010 when shares borrowed increased from 5 to 15 million according to Short Side on that day.  The short trade was covered on June 15, 2010 when 6 million shares were returned.  Since June, shares borrowed has steadily decreased to the current 3.8 million shares in Short Side.

Now, however, it seems that Lululemon might really be overvalued, with an EV/EBITDA ratio of 30.