Any further weakness in the shares will come from longs looking to cash in gains, says the analyst
Shorting shares of Namaste Technologies () (OTCQB:NXTTF) is becoming very difficult because the amount of shares that short-sellers can borrow is increasingly limited and the cost to borrow the stock is much higher than that of other Canadian cannabis stocks, an analyst for S3 Partners said Tuesday.
Ihor Dusaniwsky, managing director of Predictive Analytics for S3 Partners, said the short interest in the Canadian stock of Namaste is worth around US$17.16 million. The number of shares shorted is 11.77 million, some 4.9% of the float.
The borrow fee for the stock is 34%, which he says makes it a very expensive stock to borrow when the average cannabis stock borrow cost comes with a 15.75% fee.
READ: Feud between Namaste Technologies and short-seller Andrew Left of Citron Research escalates
For Namaste's US-listed stock, the short interest is worth US$5.26 million. The number of shares shorted is 3.58 million, accounting for 1.49% of the float. The stock borrow cost is 34%.
"There's not much stock borrow left in the security, with around 90% of the available stock borrow already taken down. Short-sellers are severely constrained in increasing their positions," Dusaniwsky said.
Namaste was recently accused by activist investor Andrew Left of Citron Research of perpetrating a fraud, a charge that Namaste has strongly rejected.
Any weakness in Namaste's stock will not come from shorts but from profit-taking by investors taking money off the table.
"Any significant downturn in Namaste’s stock price will be due to long shareholders saying “thank you” and cashing in on their over 600% one year return, realizing their profits before any more of it gets eaten away due to Namaste’s price weakness since the end of September," said Dusaniwsky.
READ: Namaste Technologies fires back at Andrew Left: misleading, defamatory and unfair
That seems to be borne out by the recent performance of Namaste shares.
Shares of Namaste in Canada were down almost 11% to C$1.70. In the US, the stock slumped 17.69% to trade at US$1.21.
On September 24, the stock in Canada settled at its highest level in months at C$3.74, having hit an intra-day top of C$3.95. In the US, Namaste stock ended at US$2.89 on the same day, also touching a session peak of US$3.05.
Namaste Technologies, through its subsidiaries, operates as a cannabis e-commerce company. The company retails vaporizers and smoking accessories through e-commerce sites in 26 countries.
Reporting by Rene Pastor, contactable on [email protected]
