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  Title	Short sales on the TSX: Where are the sellers as software stocks tumble?
  ID	30476764
  External ID	597e89bcc2188e3a5d800e8a61f08876
  Author	Larry MacDonald
  Published Date	Feb. 5, 2026, 10:06 a.m.
  Summary	What bearish investors are betting against
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  URL	https://www.theglobeandmail.com/investing/markets/inside-the-market/article-short-sales-on-the-tsx-where-are-the-sellers-as-software-stocks-tumble
  Sentiment	Negative: 0.24728    Neutral: 0.67599    Positive: 0.07673
  Relevance	0.02574

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  Content ID	37765468
  Key	1891c07e-d56c-400c-806c-d914bc90908a
  Content	The main topics in this report are: Update on the short seller buying gold stocks It was reported in the November edition of Short sales on the TSX: What bearish investors are betting against that activist short seller Carson Block, founder of Muddy Waters Research, was navigating the current bull market with long positions in Canadian gold stocks. One of his stock picks was Mayfair Gold Corp. (MFG-X), in which Mr. Block acquired a control stake that enabled him to reconstitute the board of directors in 2024. The sell-off in bullion at the end of January knocked gold stocks down hard, but Mayfair is still up by about 35 per cent over the past three months. Helping out with the gain was a listing in late January of the company's stock on the NYSE American stock exchange (while still listed in Canada). Mayfair also released in early January a promising pre-feasibility study for its Fenn-Gib gold project 80 kilometers east of Timmins, Ontario. The study outlined a net present value (after-tax) of $652-million and an internal rate of return of 24 per cent at a baseline gold price of US$3,100 per ounce. Average annual gold production of 71,336 ounces is projected at an all-in sustaining cost of US$1,171 per ounce over the first 6 years of operations. Aiding Mr. Block with his gold stock picks is 'a smart new voice' in mining, Darren McLean, Director of Research at Dfridge Capital Corp. Top short positions in Canadian stocks Short selling occurs when shares in a company are borrowed and sold on the expectation they can be bought back at a lower price and returned to the owner. Academic studies have found that large short positions signal, on average, underperformance for a stock in the quarters ahead. Below is a table of the 20 most shorted Canadian companies as of Feb. 3. Many of the companies have been on the list for several months, and their stocks have been discussed in previous columns. Let's focus on one that has not been covered in a long while. AbCellera Biologics Inc. (ABCL-Q) was one of the first pharmaceutical companies in 2020 to deliver an antibody treatment for COVID-19, but the royalties from this treatment are now on a downward trend, resulting in lower revenues, growing losses and a protracted decline in its stock price. The Vancouver-based company is currently exploring 'the idea that microfluidics and single-cell analysis could be the basis for increasing the productivity of antibody drug development.' So, instead of focusing on developing one drug, they are making 'long-term investments in technologies that would make it possible to create many medicines.' This entails a high level of R&D spending while revenues decline but company reports show $680-million cash and near cash on the balance sheet, which is deemed sufficient to support three more years of research. - - Largest increases in short positions Changes in short positions can also be informative. A large increase can signal rising bearish sentiment and a greater risk of a stock underperforming, especially if the short position was already elevated. Vice versa, a large decrease can signal declining bearishness and a reduced risk of underperforming. The table below shows the companies with sizable hikes in short positions over the past month. Several of them were also among the companies that already had high levels of short sales, including Canadian Solar Inc. (CSIQ-Q), Goeasy Ltd. (GSY-T), and Propel Holdings Inc. (PRL-T). Cannabis stocks Canopy Growth Corp.(WEED-T) and Aurora Cannabis Inc. (ACB-T) spiked in December during the run-up to U.S. President Donald Trump signing an executive order to ease restrictions on the drug in effect at the federal level. But expectations for decriminalization were disappointed and investor euphoria slipped back into bearish sentiment. - - Where are the short sellers as software stocks tumble? Software stocks have sold off sharply over the past month: the unit price of the iShares S&P/TSX Capped Info Tech ETF (XIT-T) is down nearly 20 per cent. Tumbling as well are the share prices of its three main constituents: Shopify Inc. (down 27.5 per cent ), Celestica Inc (down 20 per cent), and Constellation Software Inc. (down 23.3 per cent). AI is being blamed. It makes writing software easier and cheaper, so the fear is that software companies like Shopify, Celestica and Constellation will increasingly face new rivals that will use AI to take away business from them. Yet the short positions in Canadian software companies have remained relatively flat and small over the past year, as can be seen in the following table. According to academic studies, short sellers are superior processors of market information. Did they miss the boat or is the market overreacting to the AI scare, as academic findings might suggest? - - Klymochko's lowest-ranked stocks In a recent report, Julian Klymochko, manager of the Accelerate group of hedge funds operating out of Calgary, provided his monthly ranking of Canadian stocks. It is based on his proprietary AlphaRank system that assigns a number from 0 (bottom-ranked) to 100 (top-ranked), as derived from five criteria (value, trend, quality, price momentum and operating momentum). Here is his table of the 10 lowest-ranked Canadian stocks and their AlphaRank scores. Two stocks on the list, enCore Energy Corp. (EU-T) and Propel Holdings Inc. (PRL-T) are also on the Top 20 short positions for Canadian stocks table. EnCore Energy Corp. is engaged in the acquisition and exploration of uranium resource properties; Propel Holdings is a fintech company providing loans to persons that traditional banks don't usually service. - - Stocks most at risk for short squeezes When some event or news item causes short sellers to close their positions in a rush, the result can be a spike in the stock price as they hurry to buy and return the stock that was borrowed. Data firm S3 Partners has created an algorithm, the Short Squeeze Score, to rank companies by the likelihood of a short squeeze, with 100 being the highest level and 0 being the lowest. - - Imperial Oil (IMO-T) stock shows up as the most likely to be squeezed. It does have a relatively high level of short sales but the position has been at approximately the same size for quite a while, which is characteristic of short sales for hedging or arbitrage purposes. This suggests a squeeze would not be likely. Largest short positions in ETFs Short positions in exchange-traded funds (ETFs) can provide a picture of bearish sentiment for sectors (or all) of the stock market. This month, two energy EFTs have very high short positions, even on the basis of the S3 adjusted version for the percentage of float sold short. As explained in the Methodology and sources section below, data source S3 Partners calculates this second version to adjust the size of the float for the synthetic long positions created by short sales. Differences between the unadjusted and adjusted measures can become significant at high levels of short selling, so both should be considered in those instances. - - Methodology and sources S3 Partners was the main source for short-sales data. It was selected because Canada has many companies interlisted on the U.S. and other exchanges, and S3 Partners sums short positions (currency-adjusted) across both countries. Other data sources for short sales data don't do this. A cutoff was applied to exclude companies whose short positions were miniscule in dollar value. The percentage of a company's float (freely traded shares) is used instead of the percentage of outstanding shares to provide a better gauge of bearish sentiment. As S3 Partners argues, the percentage-of-float-sold-short indicator significantly overestimates bearish sentiment for very heavily shorted stocks and should be corrected by adding to the float the synthetic long positions created by short sales (when a stock is shorted, it creates two owners of the same shares — the original owner and the buyer of the borrowed stock sold by the short seller — what is called a synthetic long position). This adjusted version of the percentage-of-float-sold-short indicator should additionally be calculated for a stock with extreme levels of short selling. Note that short positions, regardless of data source or indicator, may not be purely bearish bets because of trades made for hedging or arbitrage reasons. Larry MacDonald is a regular contributor to the Globe & Mail and author of The Shopify Story. Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
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  Publisher Name	Globe and Mail (#1447)
  Publisher URL	https://www.theglobeandmail.com
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  Trust Flow Score	49
  Citation Flow Score	50

• Data Source

  Data Source Name	NewsCatcher (#303)
  Data Source Type	news
  Data Source URL	https://www.newscatcherapi.com/
  Description
  Weight	1