DEI Earnings Drop as Shorts Hold Firm at Year-High Levels

Douglas Emmett has just reported Q3 results, and the stock's reaction tells the short sellers' story better than the positioning data alone: the shares fell 2.8% on the day to $9.85, adding to a 2.1% loss for the week, even as most office REIT peers gained ground.

Short interest remained at its most committed level in over a year heading into the print. At 19.1% of the free float, roughly 32 million shares were borrowed as of November 3, a position that built sharply in the final week of October when borrowed shares jumped from around 30.5 million to 32.1 million and held there. The official FINRA settlement figure put days to cover at nearly 15, meaning any reversal in sentiment would take time to unwind. That the shorts barely moved after Q3 results came in, with short interest down less than 0.1% on the day, suggests the bears found nothing in the report to cover into.

The borrow market is not under stress, which makes the short positioning a conviction bet rather than a technical squeeze candidate. Availability is at 477%, meaning the pool of shares still available to lend is close to five times the size of current short interest. Cost to borrow is running at just 0.53%, up 3% over the week but still near its lowest level of the past two months. With borrowing this cheap and lending supply this ample, any short seller who wanted to press the position further faced no mechanical obstacle. The ORTEX short score, at 71.1, ranks in the 4th percentile of all stocks on the short score factor, confirming that the signal framework reads this as a heavily shorted name with bearish momentum intact.

Options positioning backs that read. The put/call ratio has climbed to 0.559, essentially matching the 52-week high of 0.559 hit on November 2, and running well above its 20-day average of 0.41. The z-score of 0.85 is not extreme, but the direction of travel is clear: options demand for downside protection has risen steadily through October and into the first week of November, shifting from a PCR below 0.21 in mid-October to current levels in just three weeks.

The Street sits in a narrow band of cautious neutrality. Analyst consensus is neutral-to-hold across the coverage universe, with Piper Sandler cutting its target from $14 to $11 on October 12, the most recent move. JPMorgan had raised its target to $16 in September, though at a stock price of $9.85 that gap looks wide. The mean price target of $12.40 implies roughly 26% upside, but analyst data has drifted slightly past the standard freshness threshold, so individual targets should be treated with some caution. EPS momentum ranks in the 99th percentile over both 30 and 90 days, a reflection of estimate revisions moving sharply higher, but the trailing PE is deeply negative and EV/EBITDA of 13.1x has drifted lower over the past 30 days.

Peer performance on the week underlines the degree to which DEI is trading as a relative laggard. HIW rose 3.3% over the past five days, BXP gained 2.9% and CUZ added 1.3%. KRC was nearly flat at plus 0.2%. DEI's 2.1% weekly loss puts it at the wrong end of the office REIT leaderboard, with only HPP, which fell more than 11% on its own specific news, faring worse. BlackRock added nearly 1.9 million shares in the quarter ending September 30 to reach 14.6% of shares outstanding, the largest institutional holder, but that buying took place before the October short-interest surge.

What to watch from here is whether the Q3 print gives any shorts reason to cover, or whether the 15-day unwind clock starts ticking as the next earnings date, now set for February 2, 2027, recedes into the distance.