HKD: Borrow Costs Jump as Shorts Exit

HKD heads into the final stretch of October with a contradictory setup: short sellers are covering at pace, yet the cost to borrow shares is rising sharply.

The most eye-catching move this week is in borrowing costs. Cost to borrow has jumped nearly 78% over the past week to 13.9%, the highest level since late September. That spike is happening even as estimated short interest has fallen 10% over the same period to around 424,000 shares, and is down 36% over the past month. The combination is unusual. Covering shorts typically eases borrow pressure, but here the cost to borrow is climbing in the opposite direction. Availability has tightened somewhat too, with the lending pool reading at 121% of current short interest, down from above 124% at the start of the week, though the 52-week low reached 11% last year, so the market is far from extreme stress. The short score has eased to 56.7 from 60.4 two weeks ago, consistent with the covering trend.

Because float data is unavailable for HKD, short interest as a percentage of free float cannot be calculated. What is clear is that the absolute short position is small relative to a market cap of around $541 million. The days-to-cover reading from the most recent official FINRA data, settled as of 30 September, sat at 3.9 days, suggesting the remaining short interest could be unwound within roughly a week of normal trading. That limits how much mechanical pressure a further squeeze could generate from here.

The ownership picture is what makes HKD genuinely unusual among NYSE-listed stocks. AMTD Group Inc. filed a Schedule 13D amendment in February disclosing a 64.8% stake, with an activist flag attached. AMTD Group Company Limited and Wonderful Time with Co. Ltd together hold roughly 65% of shares between them as last reported. That leaves a tightly controlled float, which likely explains why cost-to-borrow readings can spike on relatively modest demand for short positions. The activist disclosure should be read with the standard caveat: the 64.8% figure reflects the position as last disclosed, and holders near the 5% threshold can exit without a further filing.

The factor score picture adds context. HKD's days-to-cover rank sits at just 2 out of 100, meaning almost no other stock in the universe has as low a cover ratio on this measure. The short score rank of 14 places it in the bottom fifth for short-side pressure. Earnings history shows a wide range of outcomes: the October 2025 print produced a 42% single-day gain, while February 2026 saw a 17% drop. The next earnings event is not expected until late February 2027, leaving 125 days before the market gets a fresh fundamental read.

The week's peer group was mixed. TLS jumped 21% over the past week while SOUN fell 6% and XNET dropped 9%, suggesting no broad sector tailwind behind HKD's 2.4% weekly gain.

The most informative signal to watch next is whether cost to borrow continues to rise while short positions keep shrinking, because that divergence will say more about how tightly AMTD's insiders hold the float than it does about any directional view on the business.