• Short interest is rising across the AI data center landlords. The six landlords S3 tracks are down 33% on average since the end of July, and short interest rose in five of the six.

• Active managers are backing CoreWeave, landlords see short positioning tilt. Since the end of July, the S3 Active Long-to-Short ratio rose at CoreWeave (CRWV) from 2.5 to 3.2 and fell for the median landlord from 2.6 to 2.3.

• The landlords are among the most heavily shorted stocks in the AI buildout. Short interest in the median landlord is 22% of float, against 17% for CoreWeave.

CoreWeave’s 2032 notes traded at a yield near 15% this week, according to Bloomberg. S3 data show shares sold short rose only about 4 million, to 17% of float, after its $3.7 billion convertible priced on 17 September, while the stock fell 18% from the pricing.

S3 positioning data show the bets building one step down the chain, in the data center landlords. Most of these six started in bitcoin mining; all now lease data centers to AI and cloud firms, with buildouts largely funded by debt. They are Applied Digital (APLD), Core Scientific (CORZ), Galaxy Digital (GLXY), Cipher Digital (CIFR), Hut 8 (HUT) and TeraWulf (WULF); the first three count CoreWeave as a tenant. Median short interest rose from 18.5% to 22.0% of float since the end of July, the highest this year, and median active long interest rose from 46% to 48%. Core Scientific is the exception: active managers sold about 32 million shares bought earlier this year, and its S3 Active Long-to-Short ratio is the lowest this year.

TeraWulf is the most heavily shorted landlord, at 34.9% of float. Since the end of July, short interest is up nearly 5 points in Hut 8, to 17.1%, and in Galaxy it is near its highest this year, at 17.5%. Applied Digital is the only decline, down 5.2 points after new leases with investment-grade tenants. Landlord shorts rose into June’s rally, consistent with convertible hedging, which adds shorts as prices climb; over the past month, short sellers have pressed into falling prices.

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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.