RLJ Lodging Trust has roared back from its April lows, climbing 24% over the past month and 8% this week alone to close at $9.87 — yet short sellers are not retreating.
The most striking tension in the setup is the divergence between the price action and short positioning. Short interest has risen roughly 11% since mid-April to 9.6% of the float — nearly 14.25 million shares — and has not budged in two weeks despite the stock's sharp recovery. That's a meaningful level: nearly one in ten freely-traded shares is held short. At the same time, the borrow market remains almost entirely unencumbered. Availability of shares to borrow is running at approximately 992% of outstanding short interest — well over ten times the borrowed position — meaning there is essentially no squeeze pressure. The cost to borrow is 0.55%, broadly categorised as low, even after a 71% weekly jump from its recent trough. That spike matters less in isolation; at sub-1%, borrowing remains inexpensive, and shorts face no meaningful funding pain. Options traders are on the same side as the bulls: the put/call ratio has dropped to 0.15, nearly 1.4 standard deviations below its 20-day average of 0.19, and close to the lowest readings of the past year. That is an unusually call-heavy skew, suggesting participants are positioning for further upside rather than hedging against a reversal.
The Street narrative is cautious, even as the stock trades above most published targets. The mean analyst price target is $8.61 — roughly 13% below Tuesday's close — and the recent direction of analyst activity leans negative. Truist maintained its Hold rating in early April while cutting the target to $7. Barclays initiated in January with an Underweight and a $6 target. Ladenburg Thalmann started coverage at Neutral with an $8.50 target in March. One outlier stands out: Oppenheimer holds an Outperform, last cutting its target to $11 in May 2025. With the stock now trading through most of the Street's range, the existing consensus provides little support for the current price level. Valuation confirms the stretched picture: the price-to-book ratio has expanded 12 points over the past month to 0.64x. EV/EBITDA is running at 11.2x and was broadly flat over the same period. The ORTEX short score of 55.9 — a moderate-to-elevated reading — has held steady for two weeks, consistent with short interest being sticky rather than building aggressively. Factor scores paint a value-tilted but fundamentally mixed picture: the dividend score ranks in the 95th percentile, reflecting historical yield attractiveness, but EPS momentum over 30 days ranks in the bottom 1% of the universe.
The ownership picture adds an interesting wrinkle. Donald Smith & Co. and Vanguard both reported entering or significantly adding their positions as of the March 31 quarter, with each owning over 10% and 8% of shares respectively, suggesting at least two major institutional buyers absorbed supply during the stock's weakness earlier this year. Against that backdrop, Rm Trading of Florida trimmed its position by 9.9 million shares as of May 1, reducing to 4 million shares held — a material reduction that did not stop the stock from running higher. Insider data tells a consistent story: virtually every recent trade has been a sell, with CEO Leslie Hale offloading 133,530 shares at $7.60 in late March. That transaction, worth just over $1 million, came with the stock well below the current price, suggesting some C-suite holders have captured gains they were unwilling to hold through the recovery.
The last earnings reaction — a Q1 release in early May — lifted the stock roughly 0.9% on the day and 1.4% over five sessions, a muted response. The more interesting reaction was an earlier May print that drove +5.7% on the day. The next scheduled earnings date is August 5.
The key dynamic to monitor going into August is whether short interest at 9.6% of float holds firm or begins to cover into a stock that peers have broadly confirmed is in a sector-wide recovery: SHO, APLE, HST, and PK all gained between 4% and 8% this week, suggesting the move in RLJ is not idiosyncratic. Whether short sellers treat that sector re-rating as a reason to cover — or wait for the stock to exhaust its momentum at a price above consensus — defines the next chapter.
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