JD Sports Buyout Crushes Finish Line Short Sellers

FINL had underperformed on the charts

by Patrick Martin

Published on Mar 26, 2018 at 9:48 AM

Finish Line Inc (NASDAQ:FINL) stock is surging today, up 29% at $13.62, after British sportswear retailer JD Sports agreed to buy the company for $558 million -- or $13.50 per share -- in an all-cash deal. The news has FINL stock on track for its best day since at least 2008. Prior to today's jump, Finish Line stock had desperately needed a shot in the arm, falling 27% in 2018.

Not surprisingly, analysts had been in the bearish camp. Of the 17 brokerages covering FINL, 15 rated the shares a "hold" or worse. This downbeat outlook was shared by short sellers. In fact, short interest increased by 25% during the two most recent reporting periods to 10.60 million shares, representing 29% of FINL's total available float.

Near-term options traders, however, are more call-heavy than usual, despite limited volume. This is according to Finish Line's Schaeffer's put/call open interest ratio (SOIR) of 0.09 that ranks in the 5th percentile of its annual range. This indicates that short-term speculators have rarely been more call-skewed toward the stock during the past 52 weeks.


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