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Closely shortened Tanger Outlet shares burst when out of the blue moved 20% after which pull again

Tanger Outlets in National Harbor, Md.

Mark Gail | For the Washington Post | Getty Images

Tanger Factory Outlet Centers stocks rose 20% in early trading Thursday before retreating to previous closing levels. This was the last stock to be heavily shorted to see a rapid rise this year.

Retail stocks gained around 2% in afternoon trading. Earlier in the day it seemed to be following in the footsteps of other names, with big bets against them, including GameStop and, more recently, Rocket Companies.

"It's today's rocket," CNBC's Jim Cramer said on Squawk on the Street. The Mad Money host also said they liked Tangier's management team.

Tangier is one of the most heavily shorted US stocks, according to FactSet, with a 33% short stake. Shares with high short interest have been the focus of traders on social media, especially Reddit, in recent months.

Short selling is a strategy in which investors borrow shares of a stock at a certain price in the hopes that the market value will drop below that level when it is time to pay off the borrowed shares. Often times, when stocks with large short positions begin to rise, these investors are forced to buy stocks to limit their losses, which drives the stock up even further. This phenomenon is known as a short press.

A popular post on Wednesday was titled "Why Tanger Outlets Have the Most Potential 30x Tendies" and used a slang term for oversized returns.

Tangier is a real estate investment trust focused on physical retail. The stock was already 78% up before Thursday's surge.

Like other retail property landlords, Tangier took a hit during the pandemic. Some of the tenants have permanently closed their businesses while others have struggled to pay the rent. Fewer consumers have dared to buy things like clothes and shoes, which has resulted in a decrease in traffic.

Of course, most of Tangier's centers are outdoors and outdoors, where many Americans are more comfortable shopping than in an enclosed mall. During the fourth quarter of 2020, Tangier announced that customer visits had returned to about 90% year-on-year levels and increased to 99% for its centers in the US in January.

Even so, Tangier has vacancies in its properties to deal with in order to keep the rental checks up. It ended last year with an occupancy rate of around 92% compared to 97% at the end of 2019.

– CNNBC's Lauren Thomas contributed to this report.

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