BCH Short Interest Hits Year-High Before Thursday's Print

Among diversified bank ADRs, Banco de Chile now carries one of the more actively building short positions heading into its November 6 results, even though the absolute level remains modest relative to the float.

Short interest has climbed to its highest point in at least a year, with shares short reaching roughly 1.28 million, up 15% over the past week and nearly 18% over the past month. That pace of accumulation is faster than most of BCH's closest peers in Latin American banking. Banco Santander-Chile, for example, has seen comparatively stable short positioning recently, making BCH the more crowded name on the short side within the immediate Chilean banking peer group.

The borrow market tells a different story from a month ago. Availability has swung dramatically: it was below 40% through much of October, a tight market that drew attention in the previous preview. It has since loosened sharply, recovering to 151% as of October 30, meaning there are now roughly 1.5 shares available to borrow for every one already out on loan. Cost to borrow has followed, falling 38% over the past week to 0.93%, its lowest level in roughly two months. The borrow squeeze pressure that characterized the pre-October 29 setup has dissipated. Rising short interest alongside loosening availability means new shorts are finding it easier to establish positions, not harder.

Options traders are not doing much with either direction. The put/call ratio holds near 0.01, slightly above its 20-day average of 0.0075 but nowhere near the defensive extremes this stock has seen. The 52-week high in the PCR is 5.4, making the current reading almost irrelevant as a signal. Call volume dominates the open book by a wide margin, consistent with the pattern noted before the October 29 print. The stock closed at $37.82 on Monday, up 3.5% on the day but still off 2.3% on the week and 1.7% on the month.

Analyst coverage has been drifting cautiously lower in target. JP Morgan, the most active voice on the name, trimmed its target from $45 to $44 in early October while keeping a Neutral rating. UBS cut its target more sharply in May, from $48 to $39, also at Neutral. The mean consensus target of $22.99 from the formal consensus dataset is stale and should not be used as a reference. The operative targets from recent coverage sit in the $39 to $44 range, modestly above the current price. One factor score stands out: the 12-month forward earnings-per-share year-on-year increase ranks in the 96th percentile, suggesting analysts covering the name expect meaningful earnings growth even if conviction ratings remain neutral.

The November 6 print will test whether the improving forward earnings outlook is materializing in the quarter's actual numbers, and whether the fresh wave of short interest that built through October was prescient or premature.