Nordstrom Buyout News Immediately Wipes Out All Of Short Sellers' 2017 Gains

Nordstrom, Inc. JWN short sellers are getting no relief on Friday after the stock jumped 10.25 percent Thursday on news the Nordstrom family may opt to take the company private. However, Nordstrom short sellers hoping for an opportunity to exit their positions on Friday aren’t getting much of an opportunity, as shares climbed another 2.1 percent in early trading.

Up until Thursday’s news broke, short sellers of Nordstrom and much of the rest of the U.S. retail sector were having an extremely profitable 2017. Nordstrom shares were down 15.0 percent on the year, and Nordstrom short sellers were up a total of $186 million, according to data from S3 Research.

However, the disastrous Thursday session for shorts completely wiped out their profitable 2017 in one swoop, as S3 reports Nordstrom short sellers lost a collective $189 million in a matter of hours.

Related Link: Department Store Sector Heats Up As Nordstrom Considers Go-Private Deal

Despite large short positions in other U.S. retailers, including Kohl’s Corporation KSS, J C Penney Company Inc JCP, Macy’s Inc M and Sears Holdings Corp SHLD, S3 analyst Ihor Dusaniwsky says Nordstrom has the largest overall short position of the entire department store sector.

Despite the losses, short sellers appear skeptical that a buyout deal will actually happen.

“We are seeing more shorting in Nordstrom stock this morning, over $70 million so far, as traders are either unsure whether the Nordstrom family can pull this off or they are shorting into the sudden price spike looking for a partial reversal after the immediate volatility created by the news subsides,” Dusaniwsky wrote on Thursday.

S3 reports overall short interest in the department store sector is down $509 million in the past month but still stands at $3.5 billion overall.