CALY heads into Q1 earnings with shorts in full retreat

Callaway Golf Company enters its May 7 earnings date in a noticeably different position than it held just three weeks ago — short interest has been cut almost in half since early April, and the stock has rallied 14% over the past month to close at $15.43.

The short-side unwind is the week's defining story. SI stood at nearly 7.7 million shares in late March; by April 28 it had fallen to 5.4 million. That translates to a drop from roughly 4.2% of the free float to 2.9% — a 30% reduction in under five weeks. The pace accelerated: SI fell another 13% in the past week alone. Days to cover is 3.3, and borrow availability remains extremely loose — the lending market shows no sign of stress, with cost to borrow a negligible 0.52% and availability well above the levels that would signal a crowded short.

Options positioning tells a slightly more cautious story, though it is far from alarming. The put/call ratio is running at 0.53, modestly above its 20-day average of 0.49 and about one standard deviation elevated. That is a mild tilt toward hedging rather than conviction either way. The 52-week PCR range runs from 0.45 to 1.69, so the current reading is near the bullish end of history — options traders are not braced for bad news.

Valuation has re-rated in line with the price recovery. The P/E multiple has climbed roughly 13 points over 30 days to 29.7x. EV/EBITDA is at 18.2x, the highest it has been on a 30-day view. Those are not demanding numbers in absolute terms, but they reflect a stock that has moved from discount to something closer to fair value on forward estimates of $0.48 in EPS and roughly $191 million in EBITDA. The short score reads 35.4 — middle-of-the-road — which is consistent with a stock where short-side pressure has visibly eased. The 90-day EPS momentum factor ranks in the 98th percentile of the universe, a strong reading that helped anchor the recovery narrative.

One institutional detail worth noting: American Century added 1.49 million shares in the quarter ending March 31, and Principal Global Investors added 2.27 million — two of the more meaningful conviction buys in the register. Insider activity has been routine. CEO Oliver Brewer sold 77,336 shares at $13.38 in March alongside equity award grants — a tax-driven sale tied to vesting that matches the pattern of the broader award cycle. Net 90-day insider value is modestly positive at roughly $3.2 million, driven almost entirely by award grants rather than open-market purchases, so it does not on its own signal directional conviction.

The last earnings print delivered a harsh verdict: the stock fell 16.4% on February 12 and gave back another 6.6% over the following five days. That is the reference point that makes the current recovery striking. The question May 7 answers is whether the guidance that spooked investors in February now looks too conservative — or whether the 14% month-to-date rally has already priced in any positive revision. The short interest decline says at least some traders believe the risk/reward has shifted.