ClubCorp Holdings Inc (MYCC) Drops Hard on Scathing Short Sale

ClubCorp Holdings Inc (NYSE:MYCC) is on the short-sale restricted list after Kerrisdale Capital Management revealed a short position on the stock

by Kirra Fedyszyn

Published on Apr 7, 2016 at 1:18 PM

ClubCorp Holdings Inc (NYSE:MYCC) is 6.6% lower at $12.39 -- after sinking more than 15% in earlier trading -- on news that Kerrisdale Capital Management has taken a short position on the stock. The company published a negative report on MYCC this morning, saying the country club operator is overpriced, and that the business model for running golf clubs could lead to "a potentially fatal debt burden."

But this type of skepticism is nothing new for the stock, which has seen short interest rise by more than 19% during the two most recent reporting periods. In fact, it would currently take about seven sessions for short sellers to cover their positions, at MYCC's average daily volume.

Today, however, shorts are sitting on the sidelines, considering MYCC is on the short-sale restricted list -- and speculators are running to the stock's option pits. At last check, the stock's options were crossing the tape at twice their average intraday rate, and puts were outpacing calls by a more than 2-to-1 margin. Meanwhile, although volume is still relatively light on an absolute basis, put open interest and total open interest on MYCC have both hit 12-month highs.

On the technical front, the equity has shed 32% year-to-date, hitting a record low of $9.75 in early February. A sharp rebound off this notable milestone was quickly halted by stiff resistance at MYCC's descending 80-day moving average, and the stock has since been tracking a path lower. In fact, today's drop has the shares below their 40-day moving average for the first time since Feb. 25.

Against this backdrop, the security could be a prime target for future downgrades. In fact, all seven analysts following ClubCorp Holdings Inc's (NYSE:MYCC) call it a "strong buy."

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