LATAM Airlines Shorts Pull Back, But Borrow Conditions Remain Charged

LTM reported Q3 results on November 4 with short positioning still materially elevated, even after a sharp one-session unwind that meaningfully changed the picture from just days ago.

The borrow market remains the defining feature, though conditions have eased considerably from the extremes flagged in an October 31 preview. At the close on October 29, availability had collapsed to 2.1%, the tightest reading of the past year. By November 2 that figure had recovered to 29.6%, as short interest fell 8.2% in a single session to roughly 4.3 million shares. Cost to borrow dropped in parallel, retreating from a peak near 2.9% in late October to 1.3% as of November 2. That said, short interest has still risen 23% over the past week and roughly 25% over the past month. The partial unwind before the print does not undo the broader build.

Options positioning reinforces the more constructive near-term read. The put/call ratio has dropped to 0.61, nearly 2.5 standard deviations below its 20-day mean of 0.68. That is the lowest PCR reading of the past year, sitting just above the 52-week floor of 0.61 hit on November 2. Call demand has been running well above its recent norm heading into the release, a contrast to the defensive options posture that characterised many airline prints this cycle.

The stock has fallen 8% over the past month to $44.09, with a further 1.3% decline on November 3. That weakness came despite the partial borrow-market normalisation, which suggests that price pressure has not been purely short-side driven. Two activist investors remain on the 13D register: Sixth Street Partners, which last disclosed a 13.2% stake in February 2026 (down from 17.4%), and Strategic Value Partners, which filed an amendment in September 2025 with no current stake disclosed. Per the standard caveat, both positions are as-last-disclosed around the 5% threshold, and holders dropping below 5% are not required to file again.

ANAC data for Brazil showed record paid passengers and departures in September 2026, the largest September in ANAC's series since 2024. Neither the Brazil nor Peru datasets carry a measured lead against LATAM's reported figures, so they provide demand context rather than a signal on the print itself.

The Q3 report will show whether the demand environment visible in Brazilian and Peruvian traffic data has translated into revenue and margin outcomes that justify the stock's recovery from post-restructuring lows, and whether the partial retreat in short positioning over the final sessions before the release holds.