RH Short Sellers Decimated as Warren Buffett Announces Stake in the Company

  • Warren Buffett buys a significant stake in furniture retailer RH.
  • The stock is up big in after-hours trading and bulls are rejoicing.
  • About 36% of RH shares are sold short and they are about to get toasted.

RH (NYSE:RH), formerly known as Restoration Hardware, is a company that has a history of battling short sellers.

In 2018, the furniture retailer was ranked as the tenth most shorted name on the New York Stock Exchange. At that point, 35% of the company’s outstanding shares were sold short. Early this year, Bloomberg reported that RH short sellers lost $67 million after the equity surged by 16%. A strong first quarter performance that exceeded Wall Street expectations ignited the rally.

On Friday, short sellers will likely dance to a familiar tune. Warren Buffett revealed on Thursday that Berkshire Hathaway bought 1.2 million shares of RH. The Financial Times reported that the investment totaled $206 million for a 6.5% stake in the furniture company.

Documents revealing that Berkshire Hathaway invested in the RH. | Source: Twitter

With the legendary investor on-board, it is very likely that RH will skyrocket to a fresh all-time high – bad news to those who shorted the stock.

RH Up Big After Hours

The Warren Buffett impact is in full effect. As of press time, RH jumped by 7.93% in after-hours trading. It looks ready to explode throughout the day.

RH poised to surpass the all-time high of $192. | Source: Google

Short sellers must have felt a punch in the gut once they heard the news of Buffett’s entry. ShortSqueeze reveals that 5.8 million shares are currently sold short. That’s about 36% of RH’s 16.1 million float. Once the market opens, short sellers have little recourse but to cover.

Short sellers can recoup their losses by buying shares today; otherwise, they’re dead. | Source: Twitter

Trader Hidden Pivots, one of the market participants who longed RH before the Buffett announcement, predicts that the stock will soon reach $200 per share.


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