Short sellers have quietly doubled down on VEL over the past month, even as the stock grinds higher and analysts keep their buy flags flying.
The most striking development is in short interest, which has climbed 34% over the past 30 days to reach 3.5% of the free float — a meaningful build for a small specialty lender. The weekly pace has been particularly aggressive: positions jumped roughly 16.5% in a single week. That said, the borrow market is not signalling stress. Availability sits at 542%, meaning there are more than five shares available to lend for every one already borrowed — well into comfortable territory and actually near the loosest end of the 52-week range. Cost to borrow is a negligible 0.58%, barely moved on the week. The short-side conviction is genuine but not desperate; bears are adding at their leisure, not scrambling for borrow. Options carry a different flavour. The put/call ratio has dropped to 3.28, which sounds elevated in isolation, but it is actually running below its 20-day average of 4.26 — roughly one standard deviation lighter on the defensive side than recent norms. In other words, options traders have become less worried even as short sellers have grown bolder.
The Street remains constructive, though with one small trim this week. BTIG lowered its price target on June 17 from $23 to $22, keeping its Buy rating intact. Citizens maintained its Market Outperform earlier in May with a $23.50 target. The consensus mean sits around $21.83 against a current price of $17.74, implying roughly 23% to target — a gap that makes the bull case look reasonable on paper. The valuation confirms the cheapness: VEL trades at a price-to-book of just 0.83x and a P/E of around 6x. The bull case rests on a 7.7% portfolio expansion to $5.4 billion and effective resolution of nonperforming loans, including a net gain of $1.9 million from $76.4 million in restructured credits. Bears counter with net interest margin compression — NIM has slipped to 3.35% from 3.70% a year ago — and the risk that rising funding costs continue to erode the spread.
Institutional ownership adds an interesting wrinkle. The holder base is highly concentrated: TruArc Partners and PIMCO together control roughly 66% of shares, and Beach Point Capital added 563,000 shares in the most recent quarter to reach nearly 17%. That degree of concentration means the float is thin and any repositioning by a major holder moves the needle quickly. On the insider side, the recent pattern is entirely one-directional — every trade logged in the past 90 days has been a sale, across the CFO, General Counsel, Founder-EVP, and two directors. The dollar amounts are modest (the largest was the General Counsel selling roughly $253,000 in March), but the consistency of selling from multiple roles is worth noting alongside the rising short interest.
The ORTEX short score has been creeping up, reaching 70.2 this week from 69.1 a week ago — a gradual drift, not a spike, but it reinforces the direction of travel. Q1 earnings history adds some caution: the past two reporting events each produced next-day declines of around 5-7%, with five-day losses extending to 10-12%. The next print is not due until August 6, which gives the market time to either absorb the short rebuild or reverse it. The question worth watching is whether the institutional anchor holders — sitting on two-thirds of the shares — stay put as shorts accumulate and NIM pressure continues into Q2.
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