Chefs' Warehouse Shorts Retreat at Record Pace

Short sellers have been cutting exposure to CHEF at an extraordinary rate, with short interest falling by more than half over the past month to reach its lowest level in at least a year.

The numbers behind that retreat are striking. Shares short dropped to roughly 2.6 million, equal to 6.4% of the free float, from around 5.1 million at mid-September. That one-month decline of 49% is, by ORTEX's measure, 4.3 standard deviations below CHEF's typical weekly move, meaning the pace of covering has been far outside the normal range. The ORTEX short score has followed the same path, falling from 58.5 on October 14 to 45.5 by October 27, a ten-day drop that reflects a meaningful easing of bearish pressure. Borrow costs remain negligible throughout this period, running near 0.4%, and availability has surged to 1,454%, meaning there are now roughly fourteen shares available to lend for every one already borrowed. The lending market is effectively unconstrained, leaving no mechanical squeeze pressure behind the covering. The stock itself slipped 1.7% on the week to close at $108.99, a modest underperformance against the median peer move of minus 0.6%, even as the short base continued to unwind.

Options positioning tells a different story from the easing short side. The put/call ratio climbed to 0.78 by October 27, more than two standard deviations above its 20-day average of 0.51. That is the most defensive options positioning CHEF has seen in recent weeks, with demand for puts running well ahead of calls despite the retreat in outright short interest. The two signals are moving in opposite directions: short sellers reducing positions while options traders pay more for downside protection. That divergence makes the current setup harder to read simply.

The Street is broadly constructive on the name, though not uniformly so. Morgan Stanley raised its target to $120 from $104 on October 15 while keeping an Equal-Weight rating, a lift without conviction. TD Cowen and UBS have both maintained Buy ratings with targets in the $125 to $131 range. The mean analyst target of $124.75 implies roughly 14% from current levels. The bull case centres on CHEF's 90,000-plus SKU moat in specialty foodservice, consistent organic growth above 8.4% since mid-2025, and a management team guiding toward 7%-plus EBITDA margins. Bears point to pricing power that may be near exhaustion after five years of steep food cost inflation, a $287.5 million convertible note due to become exercisable from September 2028, and exposure to restaurant traffic weakness. EV/EBITDA has drifted up modestly over the past 30 days to around 15.2x. EPS momentum factor scores are among the strongest available, at 84 on the 30-day measure and 90 on the 90-day, though forward earnings yield ranks in the bottom third of the universe.

On ownership, CEO Christopher Pappas sold 100,000 shares on August 14 at prices around $110, a combined $11 million transaction completed without a 10b5-1 plan. General Counsel Alexandros Aldous sold a further 35,000 shares on the same day for roughly $2.9 million, also outside a pre-arranged plan. Net insider selling over the 90 days to mid-August came to 142,252 shares worth approximately $15.6 million. None of the 13D/G filers carry activist status. BlackRock held 14.8% as of end-September, adding roughly 252,000 shares in the period; Wellington Management trimmed its stake from 8.3% to 5.9% over the past year. Founder family members Christopher and John Pappas together hold around 8.4% of shares.

The next scheduled earnings date is February 10, 2027. Until then, the pace at which options hedging either moderates or accelerates, alongside any fresh movement in the institutional register, will be the data points worth tracking most closely.