B2W Cia. Digital, a Brazilian online retailer, soared the most on record as trading volume surged after lending for short selling reached the highest level since at least 2010.
B2W gained 28 percent to 8.63 reais at the close of trading in Sao Paulo, the most since the stock started trading in March 2005. Trading volume was five times the three-month daily average. It was the best performance on the Ibovespa stock benchmark, which dropped 0.4 percent.
Shares that have been sold short and not yet repurchased rose to 17 percent of the stock’s free float as of the close of trading yesterday, the highest since at least 2010, when Bloomberg began compiling the data. The stock surged as traders bought back shares cover their short positions, according to Ari Santos, an equity trading manager at H. Commcor.
“It looks like a squeeze,” Santos said in a phone interview from Sao Paulo.
In a short sale, traders sell borrowed stock, anticipating the price will drop so they can profit by buying back the shares at a lower price.
The shares have lost 49 percent this year, while the Ibovespa has dropped 26 percent.