In this October update on short interest in Canadian public companies, we report on:
- Activist short sellers
- Largest changes in short positions over the past three months
- Largest short positions in stocks
- Sell recommendations from Veritas Investment Research
- Largest short positions in ETFs
- Short squeeze candidates
- Methodology and data sources.
Activist short sellers
When activist short sellers place their bets, they then disseminate their reasons for going short by giving media interviews and publishing detailed research reports available to read at no charge on their websites. Their trades are unequivocal bets on the price of a stock going down, in contrast to regular short sellers who at times may be just hedging or arbitraging.
So far in 2025, activist short sellers have targeted six Canadian companies, going by a review of activ8insights.com. Nearly all of them are trading above the price when activist short sellers issued their calls. Only one is trading lower: non-prime lender goeasy Ltd. (GSY-T), down by more than 15 per cent.
In past years, it would often be the other way around. Most of the targeted stocks would be showing declines after the short call was made. It goes to show just how different the market is these days. It’s a bubble-like atmosphere where companies adopt the “business model” of filling their treasuries with cryptocurrencies, stocks go up not just on their own merits but because they are in an index that passive funds buy into, and one of the dominate investing strategies today is to buy into the stocks of failing companies, mainly for the purpose of squeezing the shorts.
-
-
Largest changes in short positions over the past three months
Trends over time in short positions can be informative. A strong uptrend over the preceding 3 months or longer may be a red light. Vice versa, a strong downtrend may be a green light.
On the table below of Largest increases in short positions during the past 3 months, the biggest increase in short sales was recorded by Canadian Solar Inc. (CSIQ-Q). Given the company’s exposure to the U.S. market, this is not overly surprising considering President Donald Trump’s deprioritizing of renewable energy initiatives.
McEwen Inc. (MUX-T), formerly McEwen Mining Inc., generates revenue from gold and silver mining in Argentina, Mexico and the United States. Copper production is coming on stream too. There doesn’t seem to be much negative news on the company, although some sources have noted earnings per share are negative; Morningstar.com also points out that a doubling in the share price over the past year has left the stock trading at a hefty premium.
-
-
On the table below of Largest decreases in short positions during the past 3 months, the leader is Draganfly Inc. (DPRO-Q), which derives the majority of its revenues from producing drones. Dragonfly had the largest increase in short position last month and now that position is being reversed. As mentioned last month, the company has a small float, so it doesn’t take much short selling to change the percentage of float short.
The table also shows that many companies with large short positions in 2025 are now seeing substantial reductions in the positions. They include: Air Canada (AC-T), Tilray Brands Inc. (TLRY-T), D-Wave Quantum Inc. (QBTS-T), Canopy Growth Corp. (WEED-T) and Canada Goose Holdings Inc. (GOOS-T).
-
-
Largest short positions in stocks
The table for the most shorted stocks has been in a state of flux the past few months, as noted above, with many of the usual suspects having dropped off the table. Mind you, there are still a few hanging around.
One is NexGen Energy Ltd. (NXE-T), a uranium play. Its stock has doubled since April with the help of events such as a uranium offtake agreement with a major U.S. utility. However, Simply Wall St. says the rapid price advance has discounted much of the good news; as well, “ongoing unprofitability and reliance on future project execution remain key risks.”
-
-
Sell recommendations from Veritas Investment
Toronto-based Veritas Investment Research earns its income from dispensing investment advice; most brokerage firms earn their income from the underwriting and trading departments. The vast majority of the stock recommendations from brokerage research departments are Buys, whereas Veritas analysts don’t have to worry about adversely affecting side business and thus have more scope to issue recommendations.
Veritas reports that the stocks on their Sell list have underperformed the S&P/TSX Composite Index by a compound annual growth rate of 528 basis points from inception March 25, 1999, to September 30, 2025. Here are the stocks that were added to the Sell list during the first three quarters of 2025 (and are still trading above their intrinsic value estimates):
-
-
Short squeeze candidates
Whenever some event or tipping point causes short sellers to close their positions in a hurry, the result can be a spike, or squeeze, in the stock price as they rush 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 probability and 0 being the lowest.
NexGen Energy Ltd. is the most shorted stock in October on the TSX but it’s also on the list for company’s most at risk for a short squeeze. It has a fairly high rating of 75.0.
-
-
Largest short positions in ETFs
On the table for the most-shorted ETFs, the iShares S&P/TSX Energy (XEG-T) and BMO S&P/TSX Equal Weight Banks (ZEB-T) ETFs continue to maintain their top positions. Note that there are three ETFs broadly tracking Canadian stocks: iShares S&P/TSX 60 (XIU-T), iShares MSCI Canada (EWC-N) and iShares Core S&P/TSX Capped (XIC-T). So, when it comes to assessing bearish sentiment on the overall direction of Canadian stocks, all three should be considered together.
-
-
Methodology and data 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.
Note that short positions, regardless of data source, may not be purely bearish bets because of trades made for hedging or arbitrage reasons.
Larry MacDonald is a regular contributor to the Globe and Mail. He is also the author of The Shopify Story and writes a blog on Shopify, called Shopify’s Journey