Short Sellers Are Targeting These 5 Stocks

2. Gogo Inc. (NASDAQ:GOGO)

Float Shorted: 39.87%

Number of Hedge Fund Holders: 20

Gogo Inc. (NASDAQ:GOGO) is a Broomfield, Colorado-based in-flight broadband internet service provider that was founded in 1991. Short sellers are worried by the increase in the stock price as it has risen by nearly 33% since the start of 2022. Short sellers may be forced to cover up their positions, which could create a short squeeze, further boosting the stock price of Gogo Inc. (NASDAQ:GOGO). Don Wilson’s DRW Securities LLC is amongst the institutional investors shorting Gogo Inc. (NASDAQ:GOGO).

The Street’s outlook can be a sign of worry for short-sellers as Scott Searle at Roth Capital thinks that Gogo Inc. (NASDAQ:GOGO) stock is underappreciated by investors as it operates in a duopoly-like status, underpenetrated market along with strong financial characteristics. As of Q4 2021, 20 hedge funds held a stake in Gogo Inc. (NASDAQ:GOGO), up from 19 in the preceding quarter.

Ewing Morris Investment Partners mentioned Gogo Inc. (NASDAQ:GOGO) in its Q4 2021 investor letter. Here’s what the firm said:

“The core strategy remains to focus on compounders.  As a reminder, a Compounder is a business that has…

– A durable competitive advantage
– Attractive profit margins
– Double-digit growth potential
– Strong management team

And these continue to make up the bulk of our portfolio. Let’s take Gogo as an example. Gogo has a near-monopoly providing internet on private jets in North America. The business has fantastic economics and is consistently growing at double-digit rates. And the stock trades at 12.5x cash earnings. It’s very unusual to find such a good business trading at such a low price. These are the kinds of compounders that we own.  Most of the time, when a value investor has an exciting idea, it fits one of two profiles. The first, is what we call time arbitrage. This is a situation where a good business is facing a short-term, fixable issue. And if you just have enough patience, you will be rewarded. But that’s not the case at Gogo. The business is firing on all cylinders…” (Click here to see the full text)