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Choice Hotels International heads into its November 2 earnings with a notably different lending picture than a week ago, yet the short position itself remains one of the heaviest in hospitality.
The most important change since last week's note is the rapid unwinding of borrow stress. Cost to borrow peaked at 18.8% on October 1, a level that implied severe dislocation in the lending market. By October 7 it had collapsed back to 2.1%, down 31% on the week. Availability tells the same story in reverse: it was 16% on October 1, meaning roughly one share remained for every six already lent out. By October 7 it had loosened to 97%, close to its normal operating range. That is a fast and full reversal of the squeeze conditions that defined the prior week's note, and it matters because it removes the mechanical upward pressure that compressed shorts would have faced rolling their positions.
Short interest itself, however, has barely moved. The position eased 6.8% on the week to 14.0% of free float, pulling back from the 15% peak hit on September 29. A 14% short interest level is still among the highest in the sector: ORTEX's short score holds at 80, ranking in the first percentile for the sector. The borrow market has normalised, but the conviction behind the short position has not meaningfully retreated. Days to cover on the official FINRA figure stand at 10.7, a number that underscores how concentrated this bet is relative to average daily volume.
Options positioning has shifted sharply toward call-side exposure, which creates an interesting counterpoint to the short book. The put/call ratio dropped to 0.38 by October 7, almost two standard deviations below its 20-day average of 0.89. That is close to the lowest defensive reading of the past year, with the 52-week low at 0.27. Options traders and short sellers are effectively pulling in opposite directions: the former are expressing more bullish or at least neutral positioning, while the latter are maintaining a large structural bet against the stock.
The Street sits in the middle, with a consensus hold rating and nine analysts lined up there. The mean price target of $114.60 implies roughly 10.7% upside from the current $103.49 close. Morgan Stanley remains the notable bear, carrying an Underweight and a $91 target. Baird cut its target by $1 to $128 on September 29 while keeping its Outperform, and Truist raised its Buy target to $129. The stock trades at 13.9 times earnings, which is modest by sector standards, and the EV/EBITDA multiple of 10.1 has barely moved over 30 days. Baron Capital Group holds 20.9% of shares and added 1.6 million shares as of the June quarter-end, making it by far the dominant institutional voice. Eaton Vance trimmed 384,000 shares, and Kayne Anderson Rudnick's 13G/A filed in August shows its stake fell from 6.4% to 2.0%, a material reduction, though per standard disclosure caveats these are as-last-disclosed positions and may have moved further since.
Among the closest peers this week, WH gained 0.6% and HLT added 0.8%, broadly in line with CHH's 1.1% weekly gain. BKNG was the laggard, falling 4.3% on the week. The relative stability across hotel names suggests the CHH short thesis is stock-specific rather than a macro sector call.
What to watch is whether the short position rebuilds as availability tightens again into the November 2 earnings print, or whether the reversal in borrow costs marks the beginning of a more sustained unwind.
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