Low-float IPOs attract disproportionate short interest — mega-cap AI and space IPOs with ~3–5% floats could see crowding well above average.

The Nasdaq index multiplier causes funds to overweight these names, driving long crowding.

SpaceX, OpenAI, and Anthropic list at ~$3.7T combined with 3–5% floats, implying short interest could be multiples of the average seen in IPOs.

This is intuitive, but it can be demonstrated. Companies that have lower floats are more crowded and have higher short interest in percent. The metric explicitly divides by the float.

This is because investors do not invest either long or short simply in a float-weighted manner. Their allocation is somewhere in between cap-weighted and float -weighted.

In fact, on the long side the convention is cap-weighted. This means that in these names with limited float the situation is more crowded than usual.

On the short side, positioning sometimes mirrors the long side, tending toward cap-weighted rather than float-weighted.

So, when we look at IPOs, we see a similar pattern.

The larger IPOs (~14% floated) have a short interest of 5% of float a month afterwards. This number declines after with secondary offerings.

The smaller IPOs (~9% floated) have a short interest closer to 7%.

The amount shorted as percent of cap is similar, about 0.7%.

Using these assumptions regarding the mega-cap IPOs, we can expect the short interest to be more like 16% after a month.

For finance costs, it is 2% for the higher floated ones and 2.7% for the lower ones. For the new IPOs, the borrow cost could be over 3% after a month.

The coming IPOs are summarized in the table below.

* SPCX confirmed (Nasdaq). ANTP is speculative; no ticker has been confirmed for Anthropic or OpenAI.

On the long side, these companies will not be included in the S&P, which will affect both long and short participation. Index funds will be part of the longs, and they will not be part of the stock lending pool.

Nasdaq has changed a rule so that SpaceX and others could join early with a small float, eliminating the 10% rule. What the NDX does is weigh the stock at 3 times its float, meaning index funds will cause long crowding by owning a large part of the index.

We expect the long interest as a percentage of float to be higher than other names.

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