Michael P. Regan is a Bloomberg Gadfly columnist covering equities and financial services. He has covered stocks for Bloomberg News as a columnist and editor since 2007. He previously worked for the Associated Press.

One of the more intriguing pieces of news to come out of the Sohn Investment Conference in May was Carson Block's call to short Bank of the Ozarks, a small Arkansas lender. 

The $3.5 billion bank, which focuses on real estate and construction loans and has acquired other small banks to fuel growth, saw its short interest spike to a four-year high shortly before the presentation by Block of Muddy Waters Capital. The amount of shares borrowed and sold has remained elevated ever since, as bears patiently awaited a further collapse in the stock price: 

Short Attention
Short interest has been elevated this year in Bank of the Ozarks, which reported better-than-estimated earnings on Monday.
Source: Markit via Bloomberg

On Monday, however, Bank of the Ozarks delivered a blow to the shorts by reporting earnings per share that were slightly better than estimated, unleashing what some correctly predicted would be a major short squeeze that's pushing the shares to near where they were before Block outlined his case:

Squeeze Play
Bank of the Ozarks shares rallied Monday, likely reflecting demand to purchase the shares to cover short positions.

Block's case revolves largely around potential deterioration in the real estate market, for which he said Bank of the Ozarks wasn't well-prepared, while defenders say the quality of the bank's loans is strong enough that it doesn't need more provisions for losses. Its latest earnings report seems to buttress that defense: Excluding purchased loans, only a tiny 0.09 percent of loans and leases were nonperforming as of the end of June, its best ratio as a public company.

Maybe a real estate downturn will reach the Ozarks one day. In the meantime, it's understandable to see some short-sellers' patience running thin. 

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