CAE Holds Steady as Shorts Build Into May Earnings

CAE enters the final stretch before its May 29 quarterly report with a quiet price chart masking a sharp acceleration in short interest — while the borrow market itself tells a very different story about conviction.

Short interest has climbed nearly 70% over the past month to 1.48% of the free float, with the bulk of that move happening in the week of April 21. That is a significant rate of change for a stock not typically associated with heavy short selling. Yet the borrow market signals this is not a high-conviction short: cost to borrow has collapsed to just 0.44%, down more than 50% over the past month, and availability remains extremely loose — utilization is running at 1.8%, well below the 52-week peak of 4.13%. Cheap, readily available borrows suggest the shorts building here are not facing any squeeze pressure, but they are also not the kind of committed, hard-to-borrow crowd that typically precedes a material downside thesis.

Price action reinforces that image of a market sitting on its hands. CAE ended the week effectively flat at C$34.94, barely moving while close peers absorbed real damage — LOAR and VSEC each lost more than 9% over the same five sessions, and AIR fell more than 6%. That the stock absorbed the aerospace sector sell-off without flinching is notable, though it starts from a weaker base after a 2.6% decline over the prior month.

The Street is broadly constructive but trimming its numbers. The analyst consensus mean target sits at C$47, implying roughly 35% upside from current levels — a gap large enough to attract value-oriented buyers. Recent activity is split: Canaccord has issued positive forecasts, National Bank maintained an outperform even as it cut earnings estimates, and TD lowered its target to C$49. Jefferies shaved its USD target to $27 in mid-April, though the CAD-denominated consensus remains well above the current price. The note from National Bank cutting near-term estimates is worth watching, given the EPS momentum factor ranks in the 84th percentile over 30 days — revisions have been running upward even as some houses dial back individual line items. The P/E of 26.2x has compressed by roughly three turns over the past month, bringing valuation somewhat closer to the historical range, while EV/EBITDA trades at around 11.9x.

Among institutional holders, one notable development from the last reporting period is 1832 Asset Management building a position of roughly 22 million shares — a new stake representing nearly 7% of outstanding shares — while Browning West trimmed by about 1.1 million shares. La Caisse de dépôt et placement du Québec remains the anchor holder at 9.6%. Insider data is stale (last reported trades date to December 2025) and is not reflected here.

The two most recent earnings releases both produced negative one-day reactions of 3% to 4%, with five-day moves of a similar magnitude. The May 29 print is the next concrete date around which positioning will crystallise — whether the ongoing short interest build reflects pre-earnings hedging or something more structural will become clearer as that date approaches and borrow conditions either tighten or remain as relaxed as they are today.