Canadian Pacific Kansas City heads into its July 28 earnings date with short sellers in full retreat and the borrow market among the most relaxed it has been all year.
The most striking move this week is in short interest, but not in the direction bears would want. Short positioning collapsed roughly 32% in a single session on July 7, bringing the short interest to just 0.58% of the free float — less than half its late-June level of around 8.4 million shares. That unwind follows a brief build-up through mid-June, when short interest climbed from around 5.5 million to a peak above 8.4 million shares before reversing sharply. At 0.58% of float, the absolute short position is too small to constitute meaningful bearish conviction; this looks more like tactical positioning being unwound ahead of the earnings catalyst than any structural shift in sentiment.
The borrow market confirms that story: availability here is about as far from tight as it gets. With roughly 570 million shares available to borrow against fewer than 5.3 million currently shorted, the availability reading stands at over 4,000% — meaning lenders have more than 40 shares on offer for every one already out on loan. Cost to borrow has ticked up about 27% on the week to just under 0.81%, but in absolute terms that remains negligible, well within the range it has traded all year. The 52-week peak utilization was only 10.15%, and the current level of 2.5% is far below even that modest high. There is no squeeze dynamic, no supply constraint, and no meaningful short pressure heading into the print.
The broader rail sector moved broadly in CP's favour this week, with CP up 2.6% — slightly outpacing closest peer CNR, which gained 2.1% over the same period. UNP led the group with a 3.8% weekly advance, while CSX and NSC added around 1% and 1.9% respectively. CP's factor positioning reflects a company that screens well on yield — the dividend score ranks in the 99th percentile — while the short score at 28.3, and declining, confirms that ORTEX's composite sentiment model sees diminishing bearish pressure. EPS momentum scores in the mid-to-upper 50s suggest the earnings revision cycle is mildly positive without being aggressive. Valuation multiples are gently easing: the trailing P/E has drifted lower by about 0.27 points over the past month to just under 22x, and EV/EBITDA has compressed slightly to around 15.2x — not cheap, but the direction of travel is constructive.
The insider picture is mixed and worth noting for context. The 90-day net position is technically positive at roughly 217,000 shares, but the recent trades visible in the data are almost entirely on the sell side. CFO Nadeem Velani sold just over 65,000 shares across two transactions in late May at prices between C$119 and C$121 — around 5% below current levels — while the CMO disposed of roughly 65,000 shares at C$88.87, a number that looks anomalous relative to the surrounding trade prices and may reflect a different share class or options exercise. A single director, Katharine Stevenson, bought 2,000 shares at C$118.37 in mid-May. The signal is not alarming, but it is not a picture of concentrated insider buying confidence ahead of earnings.
The next data point that matters is the July 28 Q2 result. The most recent earnings print in late April produced a muted single-day reaction of -0.4%, with a modest -1.2% move over the following five days — a subdued pattern for a stock that recently put up record quarterly adjusted EPS of C$2.08 and raised full-year guidance. How the Street reacts to whether that guidance trajectory is confirmed or upgraded, rather than the headline beat itself, is the tension worth watching into the close of the month.
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