The rally in home builder stocks might be running out of steam, ramping up significant short interest in the sector, Markit Research Director Will Duff Gordon said Wednesday on CNBC.
“Short sellers have had a tricky time the last six months, but they remain very short this sector. On average, 10 percent of the home builders shares are short, which is treble (triple) what it would be, say, the Russell 3000 Average,” he said on “Fast Money.”
Earlier this week, Barclays analyst Stephen Kim said that the sector’s rally was nearly over, and he suggested moving into stocks that had not come up as much. (Read More.)
Gordon said that “massive short interest” was growing.
(Read More: Are Housing Stocks Signaling a Pullback?)
“A lot of short sellers have been running for the hills, but they’re just starting to put shorts back on in D.R. Horton, KB Home and Toll ,” he said.
According to Gordon, there was a 28 percent short interest in KB Home, 20 percent in Hovnanian , 16 percent in Lennar , 16 percent in Standard Pacific and 15 percent in Beazer.
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