ALG shorts jump as options buyers turn bullish ahead of earnings

Three distinct signals converged on ALG this week. Short positions climbed sharply, borrow costs rose, and options buyers flipped toward calls at a pace rarely seen in the past month.

Short interest climbs at an unusual pace

Short interest in Alamo Group rose 16% in a single session on October 26, reaching 492,990 shares. That puts the position at 4.07% of free float, up from roughly 3.5% the week prior. The one-week gain of 10.3% is 2.5 standard deviations above the company's typical weekly move over the past year.

The ORTEX short score edged up to 37.1 on October 26, from 35.1 the day before. That follows a larger swing: the score touched 39.2 on October 15 before pulling back through the week. The recent climb is the most concentrated upward move in the score over the past two weeks.

Borrow costs rising, lending pool still wide open

The cost to borrow ALG shares rose 53.8% over the past week to 0.45%. That is a fast move for a name at this absolute level. The cost remains low in historical terms and has been volatile, ranging from 0.10% in late September to a peak of 0.54% in early October.

Availability stands at 2,332%, meaning more than 23 shares remain available to borrow for every one already lent out. The lending pool is loose. The jump in short interest has not tightened it in any meaningful way.

Options buyers diverge sharply from shorts

The put-call ratio fell to 1.31 on October 27, down from 2.02 the day before. Against a 20-day mean of 1.94, that reading sits 3.4 standard deviations below average, the most bullish options print in recent weeks. The 52-week low in PCR is 0.02, so there is room to run lower, but the single-day drop stands out relative to the stock's own recent range.

The share price fell 2.2% over the past week, against a median of -1.1% for its closest peers. ALG closed at $145.68 on October 27. The mean analyst price target sits at $203.50, though the most recent changes from DA Davidson, the most active covering firm, have kept a Neutral rating in place.

Alamo Group reports earnings on November 2.

Data summary

• Short interest: 4.07% of free float, up 16% in one session, up 10.3% over the past week
• Cost to borrow: 0.45%, up 53.8% week-on-week; rated low in absolute terms
• Availability: 2,332%, lending pool remains wide open
• Put-call ratio: 1.31 on October 27, 3.4 standard deviations below the 20-day mean of 1.94
• ORTEX short score: 37.1 as of October 26, up from 35.1 earlier in the week
• Next earnings: November 2