You only need to look to Big Cannabis to see the cracks in the “short squeeze” scenario.
While the giants in this space are often shorted, neither Aurora Cannabis Inc. (NYSE:ACB) nor Canopy Growth Corp. (NYSE:CGC) even rates near the top of the list.
ACB, for example, is roughly as heavily shorted as Texas restaurant chain Chuy’s Holdings Inc. (NASDAQ:CHUY). Big investors need to buy back about 20% of both companies to cover their positions.
But CHUY hasn’t gone anywhere special this week. ACB is up 5%.
CGC tells a similar story, but it’s up 19% this week. Evidently those retail investors have picked a favorite in the battered Big Cannabis group.
History will judge the results. I’m sticking with the little stocks in my IPO Edge portfolio.