There may be a technical reason for the magnitude of the rally in Canadian pot producer Tilray, which has captured the attention of traders everywhere: It's too expensive to bet against the stock.
"There is not much stock left to borrow in this name," said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, in an email. He noted that fees for borrowing Tilray stock were ranging between 500 and 700 percent on Thursday, making it an incredibly expensive stock to short.
(Short selling is the practice of borrowing shares of stock for a fee, then selling the shares in the hope of buying them back later at a lower price.)
Tilray shares started to rip higher about a month ago. Short interest on the stock also spiked to about 3.5 million shares — approximately a third of the company's overall float — from roughly 2.5 million shares in that time, S3 Partners data show. That means more and more investors were betting against the name.
The stock just went public in July and there are relatively few shares available to trade. The chart below shows that at some point along the way, it became just too expensive for short sellers to borrow the stock so they could bet against it.
That also happened to coincide with the big leap forward by the stock this month.