Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

REITs Getting Short Squeezed

  • The breathtaking surge in GameStop - along with a swelling number of heavily-shorted stocks - has sent shockwaves through financial markets amid an ongoing battle between institutional and self-directed investors.

  • Initially set into motion by a sharp vaccine-driven rally from many "COVID-sensitive" companies, a surge in self-directed investor participation has magnified the "short squeeze" phenomenon to extreme levels.

  • Mall REITs, along with a handful of other heavily-shorted REITs, have been swept up in the short squeeze frenzy. Six REITs have surged more than 50% this month while three have doubled.

  • Reversing the "Cheap REITs Stay Cheap" effect that defined 2020, the 15 most heavily-shorted equity REITs have jumped 44% so far this year compared to the modest 1% gain on the broader REIT average.

  • Hedge funds have historically been reluctant to short REITs due to high dividend yields. Ironically, the wave of dividend cuts last year opened the door to increased short interest.

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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the real estate industry. It is not possible to invest directly in an index. Index performance cited in this website or commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. Data quoted represents past performance, which is no guarantee of future results. Investing involves risk. Loss of principal is possible. Investments in companies involved in the real estate and housing industries involve unique risks, as do investments in ETFs, mutual funds, and other securities. Hoya Capital has no business relationship with any company discussed/mentioned. Hoya Capital never receives compensation from any company discussed/mentioned. Hoya Capital, its affiliate, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and other important disclosures and definitions are available by clicking the links below.

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