After a year of heavy shorting, the pet sector is entering a new phase — and Q3 earnings may determine whether sentiment reverses or resets further. Using real-time data from S3 Partners on short interest, long interest, and its proprietary Active Long-to-Short Ratio (LTS), we see a clear split forming beneath the surface.

Freshpet (FRPT) remains the most asymmetric trade: a combination of rising shorts (+48.8%), falling long interest (–6.5%), and a 37% collapse in LTS. The result was a –62% YTD decline in price, the steepest in the group and a textbook case of crowding.

Elsewhere, sentiment is beginning to stabilize:

Trupanion (TRUP) saw short interest fall by 28%, saw a modest drop in long interest (–5.6%), and gained +31.2% in LTS. The stock fell –18% YTD.

CHWY and WOOF saw LTS climb ~20%, with long interest rising in CHWY and easing short interest in WOOF. Their YTD price declines were more contained (–1.7% and –16.5%, respectively).

BARK posted a –53.8% price decline but saw a –26.3% reduction in short interest, +3.5% growth in long interest, and a +40.5% Active Long-to-Short ratio increase — pointing to stabilizing sentiment.

Long Capital Finds Its Voice

This rotation in S3 positioning data has coincided with renewed long-side engagement from active managers. In Q2, Engaged Capital took a new stake in FRPT, stepping in as valuation bottomed. Wellington and Marshall Wace increased positions in TRUP as fundamentals began to turn. In October, Shay Capital launched a public campaign at BARK, urging a $25M buyback and pointing to negative enterprise value. CHWY saw sustained active long interest growth throughout 2025, reflecting support from active institutional investors.

Downsizing Pet Trend

Positioning aligned with a structural shift in the fundamentals. According to research cited by Bank of America Global Research, the U.S. pet population has increasingly tilted toward smaller dog breeds and cats — animals that consume significantly less food per household. While spending per unit has held up due to premiumization, total volume growth has slowed, particularly for brands like Freshpet that historically benefited from large-breed demand. Even as Freshpet gained market share in Q3, this macro trend likely reinforced short conviction and capped enthusiasm on the long side.

What’s Next?

The post-earnings move in Freshpet — a 14% rally following a solid Q3 beat — is the first test of whether the short trade is exhausted. The company posted 14% revenue growth, better-than-expected EPS ($0.46 vs. ~$0.43 est), and turned free cash flow positive one year ahead of schedule. Capex was cut again, guidance was tightened, and management emphasized internal funding going forward. With short interest still high and long conviction beginning to recover, the setup is no longer one-sided.

Attention now shifts to peers, with key earnings due in the coming weeks:

Trupanion (TRUP): Reports Nov 6 (after market). Focus on enrollment trends, claims ratios, and early signs of margin stabilization.

Chewy (CHWY): Q3 earnings report anticipated on or near December 3. With guidance already revised upward, attention turns to revenue delivery, gross margin stability, and updates on its fresh food and healthcare expansion efforts.

Petco (WOOF): Q3 earnings report anticipated on or near November 25. Key topics: margin progress, Vital Care traction, and cost discipline signals.

BARK: Reports Nov 10 (before open). Watch for response to Shay Capital’s buyback push and updates on product growth and profitability path.

Talk to S3 Partners to track real-time active long and short positioning across your portfolio.

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The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.

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