An anomaly appeared on the Nasdaq stock exchange yesterday when, per an estimate by data provider Ortex, 99% of the shares in public medical tech company MiniMed Group Inc.’s float were sold-short
In contrast to buyers, short-sellers borrow stock to sell first, hoping to repay shares at a lower price to close their loan with profit
Up from 47.6% on September 15 and 77% a week earlier, MiniMed’s short interest skyrocketed to an almost unbelievable high yesterday as short-sellers borrowed and sold almost the entire float, i.e. every share of the company available for public trading on Nasdaq’s exchange
Ortex specializes in live short interest estimates for publicly traded companies. It updates data daily from securities-lending data, often days ahead of official, twice-monthly exchange reports
According to its data from securities lenders, shares of MiniMed’s common stock on loan nearly equaled the company’s full float yesterday, with available stock to borrow at just 0.08% of short interest
Understanding this anomaly begins with another publicly-traded company, Medtronic, which incubated MiniMed
Indeed, MiniMed used to be Medtronic’s diabetes business before Medtronic spun it off in a March 2026 IPO
As of September 14, Medtronic still owned 90% of MiniMed and was offering a tax-free exchange of 225.3 million shares of MiniMed’s common stock, MMED, for Medtronic’s common stock, MDT
Although there are 1.28 billion shares in Medtronic’s float — plenty to allow for that conversion while maintaining orderly trading — MiniMed only has 28.5 million shares in its float
In other words, Medtronic’s share swap offer is seven times larger than MiniMed’s entire tradable supply
To be fair, shares aren’t converting on a 1:1 basis. Medtronic set an upper cap limiting conversion to 4.5939 MiniMed shares per Medtronic share
Still, 225.3 million shares more than covers MiniMed’s float
Moreover, unless extended, the offer expires at midnight on Friday. So the time to act was yesterday
Medtronic, the parent company, created and owns the vast majority of MiniMed shares. Indeed, MiniMed’s float started changing hands in retail trading when Medtronic offered 28 million in MiniMed’s IPO
Medtronic owns the rest: an additional 253 million restricted shares of MiniMed
The whole arrangement is a textbook arbitrage scenario
This week, i.e. before the Friday deadline, investors have been able to buy Medtronic stock, tender it to accept Medtronic’s offer, and short the MiniMed shares they expect to receive in return
Medtronic is large and credible, so the deal will almost certainly execute. Guessing how close the conversion ratio would reach toward Medtronic’s upper limit of 4.5939:1 was the only hard part
Barron’s reported on October 2, for example, that MiniMed had slid about 12% since the eve of its Medtronic offer, saying arbitrageurs’ selling pressure is the likely culprit behind MiniMed’s lower stock price
The arithmetic is simple. Because slightly less value of Medtronic stock can buy slightly more value of MiniMed stock, that slight premium has become the arbitrageurs’ prize
Traders who short the MiniMed shares can buy Medtronic shares, and the swap supplies the MiniMed shares to repay their loans and close their short-sales in profit
Directly incentivized to sell as much MiniMed short as possible, short sellers have rationally gobbled up to sell-short almost every available loan of MiniMed’s float
Unconcerned, they expect Medtronic’s share conversion to execute within the next few trading days, allowing them to repay their borrowed short-sale and close their trade with a slight profit
