Itaú Unibanco: Short Interest Doubles in a Month as Stock Slides 26%

Short sellers have more than doubled their position in ITUB over the past month, with estimated short interest rising 144% to roughly 41.6 million shares. That weekly build of 64% is running approximately two standard deviations above the stock's typical weekly move over the past year, making this one of the sharpest short-side accumulations the ADR has seen.

The stock itself tells a matching story. ITUB closed at $7.13 on October 30, down 26% over the past week and 12% over the past month. The speed of that decline has coincided almost exactly with the acceleration in short interest, which was running near 24 million shares as recently as October 19 before jumping sharply through the week of October 26. Options positioning has shifted at the same time, though in an unexpected direction: the put/call ratio dropped to 1.10 on October 30, nearly 2.75 standard deviations below its 20-day average of 1.51. That is a notable divergence. Despite the heavy selling in the stock, options traders moved toward calls rather than puts on the final session before the November 3 earnings release.

Borrow conditions do not point to a crowded short. Availability in the lending pool is extremely loose, with roughly 1,136% of current short interest still available to borrow, well above the 52-week low of 650%. Cost to borrow has eased to 0.42%, down from around 0.51% a month ago, meaning the short side carries little carry cost. That loose borrow environment means the recent accumulation of short positions has been executed with minimal friction, and there is no mechanical squeeze pressure visible in the lending market ahead of the print.

Analyst opinion sits in a different register from the positioning. Goldman Sachs raised its price target to $10.50 from $9.30 on October 9 while maintaining a Buy. HSBC moved the other way the following day, downgrading to Hold with a $9.10 target. At $7.13, the stock trades well below both targets. The P/E multiple has compressed to 7.7x, down more than 2.4 points over the past week, and the price-to-book ratio has fallen to 1.82x. ORTEX factor scores give ITUB a dividend rank in the 98th percentile and a days-to-cover rank in the 100th percentile, though earnings momentum scores are weak, with the 30-day EPS momentum ranking in the 27th percentile.

The November 3 print arrives as short interest is at its most elevated in over a month, the stock has fallen sharply without obvious borrow stress, and options traders appear less defensive than the price action alone would suggest.