Berkshire Takes on Short Sellers With Bet on Furniture Retailer
- RH is the most shorted stock among home-furnishing retailers
- The shares have gained more than 500% since the start of 2017
Home furnishings are displayed in a Restoration Hardware Holdings Inc. store in New York, U.S..
Photographer: Michael Nagle/Bloomberg
Berkshire Hathaway Inc.’s new wager on furniture retailer RH has Warren Buffett’s company in a place it rarely finds itself: invested in a heavily shorted stock.
RH is the most popular short in the home-furnishing retail sector with 37% of the shares available to trade on loan to bears, according to data from financial analytics firm S3 Partners. The disclosure last week that Berkshire bought 1.2 million shares in the third quarter sent RH soaring to a fresh record. The rally hasn’t shaken the faith of short sellers, who profit when the price of a stock falls. Short interest in RH has barely changed since Berkshire revealed its purchase.
The retailer formerly known as Restoration Hardware has a couple of traits that undoubtedly appealed to Berkshire. For one, Buffett likes to stick to areas he knows best when selecting stocks. Berkshire counts at least four furniture retailers among its portfolio of companies, including Nebraska Furniture Mart which has a sprawling 80-acre campus in Buffett’s hometown of Omaha, Nebraska.