Lumentum (LITE), a leader in optical products for AI and cloud, is up 140% after a 339% gain last year, now $70B cap. It has a large convertible, $1.26B with 0.375% coupon due 2032.

Short interest is 11.6% of float but mostly convert related; directional short would be 3–4%, after adjustment to estimate convert hedge.

Short interest has declined, as has long interest, the latter consistent with profit-taking into strength YTD. Sell-side sentiment remains constructive, with no sell ratings.

Lumentum (LITE) is a global leader in optical and photonic products. The company designs and manufactures innovative components, modules, and subsystems that enable high-speed cloud networking, advanced artificial intelligence (AI) data center infrastructure, and industrial laser manufacturing technologies.

The stock is up 140% YTD, a pattern seen in many AI-adjacent names. This follows a 339% gain last year. The stock is now close to a $70B market cap.

LITE reports August 11th after the close, and options imply a 10% move. Short interest is 8.8MM shares, 11.6% of float. S3’s Convertible Bond Tearsheet on the Bloomberg Terminal shows 4 convertible bonds, with 0.375% of 2032 the largest. Fully-hedged, holders of Lumentum’s convertible bonds would account for 8.9MM of the short — slightly more than the entire reported figure. If half were hedged, it would be 4.45MM shares.

The stock has run so far past the conversion price that the bonds now have a delta of 1 with no downside protection, static in most circumstances.

Because the hedge component is constant, the roughly one-third fall in reported short interest since January came entirely out of the genuine short — a far larger proportional move than the headline suggests.

Adjusted, the outright short is an estimated 3–4% of float. S3’s crowded and squeeze scores take the reported figure as their input; we would expect both to read around half their published levels on the adjusted basis.

Companies with a large in-the-money convertible will often show reduced short interest and crowdedness once these hedged positions are removed using the S3 Tearsheet.

Sell-side sentiment remains broadly constructive, with no sell ratings.

Long interest is unaffected by the bonds and can be read at face value; it has also declined, reflecting profit-taking into strength on the part of active managers.

Want to know more? Access this data in real time using S3’s BLACK APP & BLACK MAP

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.