Kelly Services KELY.B enters its May 7 Q1 earnings call with one of the stranger lending-market stories in small-cap staffing: a cost-to-borrow above 200% that peaked near 255% in March, attached to a short position that has since all but evaporated.
The most striking feature of the current setup is how fast short sellers reversed course. In early April, during the peak of the tariff-driven market sell-off, short interest in the Class B shares spiked to roughly 33,700 shares around April 6 — elevated against the stock's tiny free float of approximately 212,000 shares. That implied a short interest of around 15% of free float at the peak. By April 13, that position had collapsed to about 7,756 shares, or roughly 3.7% of float. The utilization reading corroborates the story: it hit 38% around April 7, then fell to near zero within a week and has stayed there through the end of April. Whatever the trade was, it was covered quickly.
The cost-to-borrow data tells the full arc. Borrowing fees were still in double digits in mid-January at around 11%, then climbed relentlessly — through 100% in early February, past 200% by late February, peaking near 255% in the second week of March. The rate has since eased a little, but the most recent reading available (April 10) shows CTB still above 220%. That is an exceptionally expensive borrow for a staffing business. It reflects the structural tightness of a lending pool for a share class with very little freely available stock: even with short interest largely gone, the 34,763 shares available to borrow on April 13 still registered at 640% availability against remaining short interest — a wide ratio, but one that mostly reflects how few shares were short rather than abundant supply.
The broader context matters here. KELY.B is the Class B non-voting share of Kelly Services, which has roughly $4 billion in estimated revenue and is transitioning through a period of ownership change — AE Industrial Partners disclosed a nearly 9% stake in January, a filing that prompted early coverage asking whether the new shareholder could help close what analysts had framed as a valuation gap. Zacks raised its rating to Hold on April 22, but formal analyst coverage on the B-shares is thin, and most institutional ownership sits in the voting Class A shares. With Q1 results due May 7, the last two earnings releases produced meaningful negative reactions: the stock fell 8% on the day following the most recent print in February and was down 23% over the following five days. The prior event in February 2026 had a comparable shape.
The price action this week captures the tension. The stock closed Wednesday at $15.38, down 4% on the day and off 13% for the week — yet still up 21% over the prior month. That one-month rally reflected the January ownership news and a broader recovery trade. The weekly pullback may simply reflect the broader market's retreat from that risk-on window, or it may be early positioning caution ahead of the May 7 call.
With short sellers retreating and borrowing still expensive, the next read on sentiment comes from the earnings call itself — and specifically whether management offers any update on the strategic review that AE Industrial's arrival appeared to catalyse.
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