TMHC Bears Exit as Calls Flood In Before Q2

Why this matters: Three signals are converging on TMHC with Q2 earnings due tomorrow. Short sellers are cutting positions at pace. Options traders are piling into calls. And analysts have quietly turned cautious — even as Berkshire Hathaway's $72.50 bid holds the floor.

Analysts Downgrade; The Market Doesn't Care

Five analysts have downgraded TMHC since June 1. Barclays moved to Equal-Weight on July 14. Raymond James, Wolfe Research, Truist, and RBC all cut ratings in June. The consensus sits at Hold, with a mean price target of $66.75 — nearly $6 below where the stock trades today at $72.44.

That gap is the Berkshire premium. The stock is trading on deal certainty, not on sell-side conviction. The divergence between analyst caution and market price tells you everything about how this name is being positioned right now.

Call Buyers Take Over

Options positioning has shifted sharply. The put/call ratio hit 0.32 on July 20. That's nearly 2.5 standard deviations below its 20-day mean of 0.47. It's one of the most call-heavy readings in months.

The 52-week PCR low is 0.125, so there's room to go further. But this level already signals that traders are leaning heavily toward upside scenarios. With earnings tomorrow, some of that positioning is almost certainly deal-related hedging — investors locking in exposure ahead of the Q2 print in case any update on the Berkshire transaction emerges.

Short Sellers Cover Quickly

Bears have retreated sharply. Short interest fell 18% over the past week to 3.3% of the free float. Over the past month, positions are down roughly 39% from around 5.3% of float.

At 3.3%, SI is not at an extreme level. But the pace of the exit is notable. Availability remains very loose at 3,692% — there are far more shares available to borrow than are currently borrowed. The cost to borrow spiked to 1.3% last week, up more than 300% in seven days, though it remains low in absolute terms. That spike likely reflects brief demand volatility rather than genuine borrow scarcity.

Corroborating Context

Geode Capital added 551,297 shares as of June 30. American Century added 633,276. T. Rowe Price added 330,816. BlackRock added 129,881. Institutional accumulation at these levels suggests passive and active managers are comfortable holding through the deal close.

The ORTEX short score sits at 32.1, near its lowest point of the past two weeks. That's consistent with the short-covering trend.

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• Price: $72.44, up 0.4% on the day, +1.2% over the month
• SI % of free float: 3.31% (down from ~5.5% in mid-June)
• PCR: 0.32 (z-score: –2.50 vs. 20-day mean)
• Cost to borrow: 1.32%, up ~315% week-on-week
• Availability: 3,692% — very loose borrow market
• Earnings: July 22, post-market
• Acquisition bid: Berkshire Hathaway at $72.50/share

What to watch: Tomorrow's Q2 print and any update on the Berkshire deal timeline.