Intel Corp. shares have surged 214% since a low on March 30, adding more than $440 billion to the chipmaker’s market capitalization and pushing short-sellers’ paper losses above $12 billion, according to S3 Partners data. [1, 2, 3]
The stock rose 25% last week and reached a record high on Monday before falling as much as 5% on Tuesday. [2, 3] Short interest in Intel as a percentage of float is near a 52-week high, showing how crowded the bearish trade had become even as the shares kept climbing. [1, 2, 3]
Reports said the latest rally was helped by a preliminary chip-making agreement with Apple. [2, 3] Intel was the top performer in the S&P 500 Index since the start of April, according to the reports. [2, 3] Matthew Unterman, managing director at S3 Partners, said, “Intel’s almost like a poster child for the momentum trade right now. At some point, the momentum’s going to stall.” [2]
The squeeze has also drawn more attention to other chipmakers. Investors are watching Micron Technology and Advanced Micro Devices as short interest rises there too. [2, 3] Brad Lamensdorf, co-manager of the AdvisorShares Ranger Equity Bear ETF, said, “It just isn’t realistic to try and pick a top in a momentum stock. There’s no ability to control your risk.” [2]
Thomas George, portfolio manager at Grizzle Investment Management, was even more blunt. “I would not short any of these stocks. This is not a sector where glory can be found for a short seller,” he said. [2]
The shares hit a low on March 30, then kept running into May. [1, 2, 3] Reports published on Tuesday said the stock had pulled back as much as 5% after Monday’s record high. [2]
