(Bloomberg) — A surge in shares of cannabis companies has saddled short sellers with more than $105 million in losses this year, but that hasn’t stopped traders from betting against the sector.
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In the last 30 days, short sellers have plowed $91 million into new positions betting that pot stocks will decline despite the paper losses, according to a report from S3 Partners LLC. The contrarian trades are taking place as cannabis companies are rising on hopes that marijuana will be reclassified and that the SAFE Banking Act, which would make financial services more accessible to the industry, will move forward in US Congress.
This month, the MJ PurePlay 100 Index, a basket of US and Canadian cannabis company stocks, has gained 19%.
“If the rally was overblown or if these measures take longer than expected to come to fruition, we may see a future stock price…
