Cohu Short Interest High, But Insiders Were Selling Into Strength

COHU carries one of the heavier short positions in its peer group ahead of tonight's earnings release. At 19% of free float, COHU's short interest towers above closely correlated names like LRCX and ENTG, which have posted weekly gains of roughly 8% and 3% respectively. COHU itself fell 3.9% over the past week, moving against the median of its eight closest peers. The borrow market tells a different story from the short-position size: availability is ample at 240%, more than double the shares already borrowed, and cost to borrow has dropped 24% over the past week to just 0.39%. Despite 19% short interest, there is no squeeze pressure in the lending pool.

The more pointed signal going into this print is insider selling. CEO Luis Muller sold roughly 105,000 shares between September 21 and October 2, realising approximately $6.7 million, all under pre-arranged 10b5-1 plans. Chief Recurring Officer Christopher Bohrson also sold in mid-October. Net insider disposals over the past 90 days total around 135,000 shares worth $8.3 million. The 10b5-1 label limits the read-through, these were scheduled, not discretionary, but the volume and timing, executed while the stock was trading well above current levels, is a fact the print will need to address.

The analyst community has been firmly constructive, with all recent coverage maintaining Buy or Outperform ratings and targets clustered in the $65 to $80 range. Those targets were set after Q1 results in late July and reflect optimism around the HPC opportunity, where Cohu has guided to $80 to 100 million in sales this year and has seen Q/Q systems order growth of 62%. Recurring revenue reaching 60% of sales in the March quarter is the structural shift bulls are pricing in. Bears counter that Semi Systems revenue was flat quarter over quarter at $49 million and that the Q2 guidance of $144 million came with a lower gross margin guide of 44%, as heavier systems mix dilutes the recurring revenue story. The stock has retreated 21% over the past month from the levels where analysts set their targets, narrowing the gap between price and consensus.

Retail attention has spiked sharply in the past week. ORTEX's Wikipedia and stock-page view signal registered a z-score of 4.8 as of October 19, the highest attention reading in the company's recent history. That level of retail focus into an earnings print, combined with 19% short interest, means any upside surprise carries more kinetic energy than the positioning alone would imply. The last quarterly result, in late July, produced a one-day gain of 22% and a five-day move of 32%.

Tonight's print is therefore a test of whether the recurring-revenue mix shift and HPC pipeline can justify a valuation that the insiders who know the business best chose to reduce at prices 20% above where the stock is trading now.