EIS, the iShares MSCI Israel ETF, enters July with short sellers pulling back sharply — even as the ETF itself gives up ground on the month.
The most striking development in the lending market is how quickly borrow pressure has released. Availability has expanded dramatically, reaching roughly 307% — meaning there are now three shares available to borrow for every one currently lent out. That is a dramatic reversal from early June, when availability dropped as low as 116%, with utilization approaching 56%. The lending pool is now far looser than at any point in the past month. Cost to borrow, at just over 1%, remains modest — it ticked up about 18% on the week but is still well below the elevated levels seen in late May. The overall borrow picture is one of retreat, not pressure.
Short interest reinforces that read. Bears have unwound positions aggressively over the past month, with SI % of free float dropping from a peak near 6.3% in early June to roughly 3.9% now — a fall of more than 27%. The single-day drop on June 30 was particularly sharp, down over 10%. The ORTEX short score has eased to 43.5, retreating from a recent high of 47.4 hit on June 26. That score sits in mid-range territory, suggesting neither extreme bearish conviction nor a crowded long. The direction of travel is clearly away from short exposure.
Price tells a more complicated story. EIS closed at $120.71 on June 30, up around 1% on the week and gaining nearly 1% on the day. But zoom out one month and the ETF is down 12.3% — a meaningful drawdown for a fund tracking an index. That monthly loss is the backdrop against which the short unwind is happening: bears appear to have covered into weakness rather than pressing new positions. Whether that reflects profit-taking or fading conviction in the bearish thesis depends on what drove the June selloff — geopolitical developments in the Middle East remain the primary macro variable for this fund.
Institutional ownership data (as of March 31) shows BlackRock holding roughly 7.6% of shares, with Morgan Stanley close behind at 6.1%. The holder count of 91 institutions is relatively thin for an ETF, which amplifies the effect of any single large holder adjusting exposure. It is also worth noting that BlackRock reported its entire position as a new addition in that filing period — a disclosure quirk worth watching in the next 13-F cycle.
The key variable to track heading into the back half of summer is whether the short rebuild that peaked in early June — when SI nearly doubled from late-May levels — reasserts itself, or whether the current unwind reflects a more durable shift in sentiment toward Israeli equities.
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