Short interest in real estate stocks decline in April as sector delivers strong earnings

Short interest in real estate stocks declined by 3 basis points at April-end to 2.01% from 2.04% at the end of March, as the sector delivered strong earnings, partially offsetting the negative sentiments surrounding dim chances of a near-term rate cut.

Real Estate Select Sector SPDR Fund ETF (NYSEARCA:XLRE) is down 6.48% year-to-date, while the broader S&P 500 Index is up 10.12%. For the month of April, XLRE posted negative returns of 6.82%, while SP500 retreated 3.97%.

The largest lodging real estate investment trust, Host Hotels & Resorts (HST), continued to hold the highest short position among the S&P 500 real estate stocks, closing April with a short interest of 5.65%. The total number of shares sold short stood at 39.31M.

Timber REIT Weyerhaeuser (WY) was the least shorted among the S&P 500 real estate stocks. Bets against the stock came in at 0.90%, with the stock seeing 6.51M shares sold short last month.

Industrial REIT ProLogis (PLD) and telecom tower REIT American Tower (AMT), holding the most weightage in the XLRE index, were among the five shares least shorted. ProLogis, carrying an index weight of 11.69%, logged a short position of 1.14% as of April 30. Meanwhile, American Tower, which holds an index weight of 8.89%, reported a short interest of 1.01%.

Below are the 5 most shorted and 5 least shorted S&P 500 real estate stocks as of the end of April:

Short interest subsector-wise:

Hotel & Resort REITs logged the steepest decline in short position among the XLRE subsectors, followed by Office REITs. Bets against the former fell to 5.65% from 6.60%, while it decreased to 3.78% from 3.91% in the case of the latter.

Notable outliers were Healthcare REITs and Real Estate Management & Development, with short positions in the subsectors increasing by 21 basis points and seven basis points, respectively. Subsector-wise short positions as of April-end were as below: