The most striking tension in PSC this week is a widening gap between two signals that usually move together: short interest has collapsed, but the cost to borrow remains punishingly high.
Short positions in the Principal U.S. Small-Cap ETF effectively halved overnight. Estimated short interest dropped nearly 49% on August 11 alone, falling from roughly 42,800 shares to just 22,000 — a level that puts short interest at a negligible 0.09% of float. The direction-of-travel has been consistently lower over the past month, with August's reading down about 19% from July levels. At that scale, shorts are not a meaningful market force in PSC.
The borrow market tells a different story. Cost to borrow remains at 55.6%, a level that looks puzzling given how little short interest actually exists. That rate has been sticky — ranging between 52% and 63% for most of the past six weeks, and briefly touching 110% at the start of July before easing. Availability has tightened meaningfully too: the lending pool has moved from comfortably loose (400–600%+ available shares relative to short interest in mid-July) to just 159% now, a sharp compression over recent weeks. Every share in the borrow pool is currently lent out. The 52-week low availability reading was 17.6%, so the market has been tighter before — but the speed of tightening is notable for a fund with such small aggregate short positions.
The ORTEX short score has held steady in a tight band around 60 throughout August, suggesting no directional conviction from the scoring model. The score has moved only marginally — from 58.7 at the end of July to 59.8 now — which is consistent with a lending market that is active but not extreme. There is no analyst coverage to speak of for an ETF of this type, no earnings catalyst, and valuation multiples are not applicable in the traditional sense. The fund paid a quarterly cash dividend of $0.087 per share at the start of July, down from $0.108 in April, which is worth noting for income-oriented holders but does not change the positioning picture.
PSC closed at $69.77 on August 11, down less than 0.7% on the week and up just under 2% over the past month — modest moves for a small-cap fund in a market environment where quality tilts have faced some headwinds against higher-beta peers. The stock-specific story here is narrow. What is worth watching is whether the borrow cost normalises now that short interest has collapsed, or whether something structural in the lending pool is keeping rates elevated despite limited aggregate demand.
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