Heavily shortened Tanger Outlet stocks, if suddenly moved, will burst 20% and then pull back
Tanger Outlets in National Harbor, Md.
Mark Gail | For the Washington Post | Getty Images
Shares in the Tanger Factory Outlet Centers rose 20% at the start of trading Thursday, making it the latest sharply shortened stocks to rise rapidly this year before pulling back and closing in the red for the session.
The retail stock closed 3.3% at $ 17.15 per share. Earlier in the day it rose to $ 22.40 a share and appeared to be following in the footsteps of other names betting big on them, including GameStop and, more recently, Rocket Companies.
“It’s the rocket today,” CNBC’s Jim Cramer told Squawk on the Street as the stock rose. The Mad Money host also said they liked Tangier’s management team.
According to FactSet, Tangier is one of the most short-lived US stocks with a 33% short stake. Shares with high short interest have been the focus of traders on social media, especially Reddit, in recent months.
Short selling is a strategy in which investors borrow shares of a stock at a certain price in the hopes that the market value will drop below that level when it is time to pay off the borrowed shares. Often times, when stocks with large short positions begin to rise, these investors are forced to buy stocks to limit their losses, which drives the stock up even further. This phenomenon is known as a short press.
A popular post on Wednesday was titled “Why Tanger Outlets Have the Most 30-fold Tender Potential” and used a slang term for oversized returns.
Tangier is a real estate investment trust focused on physical retail. The stock was up 78% before Thursday’s surge.
Like other retail property landlords, Tangier took a hit during the pandemic. Some of the tenants have permanently closed their businesses while others have struggled to pay the rent. Fewer consumers have dared to buy things like clothes and shoes, resulting in a decrease in traffic.
Of course, most of Tangier’s centers are outdoors and outdoors, where many Americans are more comfortable shopping than in an enclosed mall. In the fourth quarter of 2020, Tangier announced that customer visits had returned to around 90% year-on-year levels and increased to 99% for its centers in the US in January
Even so, Tangier has vacancies in its properties to deal with in order to keep the rental checks up. It ended last year with an occupancy rate of around 92% compared to 97% at the end of 2019.
– CNNBC’s Lauren Thomas contributed to this report.