By Steve Gelsi
Short interest in cannabis stocks has fallen in a sign that investors are placing fewer bets that the sector will weaken, according to fresh numbers this week.
But cannabis stocks still remain in the red for the year, and even added to their losses on Friday.
Total short interest in the cannabis sector has been falling consistently for more than a year, S3 analyst Ihor Dusaniwsky said in a research note on Wednesday.
“Cannabis short sellers were seeing the market value of their shorts decrease but were not actively replacing that short exposure,” Dusaniwsky said. “Overall, the cannabis sector is not a favorite short, even though the trades have been profitable in 2022.”
Out of the 100 cannabis stocks S3 tracks, short interest has fallen to $632 million from $1.57 billion in December and $3.14 billion in May 2021.
Among specific cannabis names, Tilray Brands Inc. /zigman2/quotes/209129655/composite TLRY +7.75% led the list with short interest of $244.4 million, down by $185 million since the start of 2022.
Canopy Growth Corp. /zigman2/quotes/200603886/composite CGC +8.56% ranks second with short interest of $113.7 million, down about $415 million from the start of the year.
Sundial Growers Inc.’s /zigman2/quotes/213489825/composite SNDL +6.27% short interest now tips the scales at $66.3 million, down by $88.4 million from Dec. 31.
Cronos Group Inc. /zigman2/quotes/206842762/composite CRON +4.82% has short interest of $57.9 million currently, down by nearly $28 million from the start of 2022.
Aurora Cannabis Inc. /zigman2/quotes/210559470/composite ACB +3.94% has short interest of $42.3 million, which is lower by about $174 million this year.
Truelieve Cannabis Corp. ‘s /zigman2/quotes/207658767/composite TCNNF +7.06% short interest currently sits at about $14.2 million, down by about $3.5 million this year.
For investors going long on shares of cannabis companies, 2022 has been a year of steep losses for stocks in the sector, as the Canadian market failed to generate profits. In the United States, Congress has stalled on any meaningful effort to legalize cannabis on a federal level.
Those losses continued for many cannabis stocks on Friday, despite a rally in the broad market .
Canopy Growth dropped 9% on Friday to bring its total share price loss for the year to 74.7%.
Tilray dropped by 10% on Friday, with a total loss for the year of 53%.
Sundial Growers share dropped 2.4%, to bring its losses for 2022 to 44.4%.
Aurora Cannabis is down 7% on Friday, and has lost 74.6% of its value in 2022.
Trulieve shares fell 1.9% on Friday and the stock is down 53% for the year.
Cronos Group fell 6% on Friday, with losses of 25.4% for the year.
The Global X Cannabis ETF /zigman2/quotes/214261331/composite POTX +4.26% has dropped 52.9% in 2022. The AdvisorShares Pure U.S. Cannabis ETF /zigman2/quotes/220307682/composite MSOS +6.78% is down by 55%.