Sears shares jump as investor calls out 'alarming' short selling volume, urges retailer to consider going private

A Sears investor is urging the embattled department store chain to consider going private, among other strategic alternatives.

Memento S.A., a Switzerland-based investment manager for the Elarof Trust, which owns about 2 millions shares in Sears, issued an open letter to the company Thursday morning, expressing concerns over “historical patterns of alarming short-selling activity” in the stock.

Sears shares were up more than 5 percent Thursday morning in premarket trading on the news.

Memento said it wants to ensure Sears’ management team is taking action to “curb” future short-selling activity.

“We have invested in Sears because of our belief in the long-term value of its vast national network of over 1,100 Sears and Kmart retail stores across the United States, the strength of its well-established proprietary brands, its position as the nation’s leading provider of appliance and product repair services, and its insurance subsidiary,” Alessandro Mauceri, the CEO of the firm, wrote.

To be sure, Mauceri added: “The market has indicated that more short positions exist in the market than SHLD shares available to borrow, as shown by the unusually high volume of short-selling activity relative to the Company’s real available float of outstanding shares.”

A representative from Sears didn’t immediately respond to CNBC’s request for comment.

Memento is urging Sears to form a board to look after shareholders, to temporarily suspend short-selling in Sears’ stock, and to evaluate strategic alternatives that include going private.

Mauceri said short interest in Sears shares has fluctuated between 12 million to 19 million shares just within the past two years.

As of Wednesday’s market close, Sears’ stock has fallen roughly 55 percent this year.

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