NXTG — First Trust's Indxx NextG ETF tracking 5G and next-generation telecom infrastructure — has pulled back slightly this week even as the short activity that spiked sharply a week ago begins to unwind.
The short interest story has shifted since last week's note. Estimated short shares have fallen roughly 7% over the past five days, retreating from the mid-week highs of around 2,515,000 shares recorded on May 12 back to approximately 1,767,000 shares. That is still well above the sub-200,000 levels seen in late April and early May, but the direction of travel has reversed. At just 0.046% of the free float, this remains an almost negligible short position by any conventional measure. The spike from two weeks ago — which looked more like an ETF creation/redemption artefact or a single institutional hedge than a genuine directional bet — now appears to be partially unwinding, as that thesis suggested it would.
The borrow market continues to tell the more durable story here. Cost to borrow has been anchored stubbornly in the 20–21% annualised range throughout May, easing only slightly from the 21% area seen earlier in the month to around 20.4% as of May 14. For context, that level has been broadly consistent since at least February. This is an unusually elevated cost for any passive ETF, and it has not responded meaningfully to the short interest retreat. Availability, meanwhile, has swung back dramatically — from around 1,100% in the middle of last week to over 4,466% now, with 39,728 shares available to borrow. That is extremely loose by any standard: more than 44 shares available for every one currently borrowed. The borrow pool is not constrained; what remains elevated is the price of borrowing.
The ORTEX short score is running at 36.7, down from the local high of 40.2 on May 12 and tracking the short interest decline. That mid-30s reading places NXTG in relatively neutral territory — neither flagging extreme short pressure nor signalling a particularly clean setup for shorts. The fund itself closed at $142.18 on May 19, down about 1.2% on the week but up a strong 11% over the past month. That one-month gain continues to create the same tension noted last week: price performance has been robust while the borrow cost remains stubbornly high.
No earnings events apply to this fund structure. Options data shows a persistent zero put/call ratio, indicating no meaningful options activity — consistent with an ETF that does not attract much derivatives interest. Dividend activity is sparse, with the most recent cash distribution of $0.23 per share declared in late March.
The key thing to watch is whether the 20%-plus cost to borrow finally normalises. Short interest is fading back toward its prior low range, and availability is now exceptionally loose — yet borrow cost has barely moved. That divergence, between a relaxing lending supply and a cost that refuses to drop, remains the unresolved question in the NXTG borrow market.
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