Core & Main, Inc. (CNM): The Large-Cap Stock Feeling the Heat from Insiders and Shorts

Core & Main, Inc. (NYSE: CNM), a major player in the wholesale distribution of construction and industrial supplies, is currently grappling with a dual exodus: its own insiders are unloading shares at unprecedented rates, while short sellers are amassing bearish bets on the stock. This confluence of pessimism raises critical questions about the company’s future trajectory. Let’s dissect the data driving these moves and what they mean for investors.

Insider Selling Reaches Record Levels

The most striking red flag is the staggering insider selling activity over the past two years. Insiders collectively sold 145.8 million shares worth $4.79 billion, as of early 2025. The selling was concentrated among key figures:
- Cd&R Investment Associates X, a private equity firm tied to the company, unloaded $4.7 billion in shares alone.
- Executives like Stephen O Leclair ($24.8 million) and Laura K Schneider ($14.3 million) also participated in significant sales.

While insiders own only 3.49% of CNM’s shares, the sheer scale of selling—particularly from institutional insiders like Cd&R—suggests deep-seated concerns about the company’s prospects. This activity is even more notable given that Core & Main’s stock price has declined 18% year-to-date in 2025 amid broader market volatility.

Short Sellers Bet Against CNM’s Near-Term Outlook

Meanwhile, short interest—a measure of shares sold short—has surged. As of April 15, 2025, 14.74 million shares were shorted, representing 7.77% of the company’s public float. This marks a 2.3% increase from the prior period, signaling growing investor skepticism. The short interest ratio (days to cover) stood at 7.0, meaning it would take roughly a week for short sellers to buy back all borrowed shares if the price rises—a metric that often precedes short squeezes but also highlights elevated bearish sentiment.

Institutional short sellers like Wolverine Trading LLC, Millennium Management LLC, and Citadel Advisors LLC are among the largest bearish bettors, according to SEC filings. While CNM’s short float is moderate compared to some peers, its rise amid a sector where most competitors have low short interest (e.g., US Foods at 2.63%) underscores its unique risks.

Why the Pessimism? Digging into the Financials

The exodus isn’t without justification. Despite a 10.6% year-over-year sales increase to $1.74 billion in Q1 2024, Core & Main’s net income fell 24.1% to $101 million, reflecting rising costs. Key issues include:
- Skyrocketing SG&A expenses: Up 21% due to acquisition integration costs, signaling operational strain.
- Debt-driven interest expenses: Jumped from $81 million to $142 million, squeezing profitability.
- Margin pressure: Inventory costs and pricing headwinds in 2025 threaten further dilution of earnings.

These factors, combined with a -63.43% insider transaction rate (a measure of net selling by insiders), suggest executives see little near-term upside.

Risk Factors and Potential Catalysts

• Short Squeeze Risk: While the 7.0 days-to-cover ratio is elevated, it’s far below the 10+ threshold that typically sparks panic buying. A rally could pressure shorts, but fundamentals may limit such a scenario.
• Sector Dynamics: CNM’s role in infrastructure projects (e.g., construction supplies) offers a defensive angle, but its debt-heavy balance sheet and margin issues offset this advantage.
• Competitor Comparisons: CNM’s 7.77% short float places it mid-pack among peers, but its financial struggles make it a weaker bet than lower-leverage competitors.

Conclusion: A Cautionary Tale for Investors

Core & Main’s stock is under siege from both insiders and short sellers, driven by mounting financial pressures and a lack of profitability despite sales growth. With $4.79 billion in insider sales, rising short interest, and deteriorating margins, the company faces significant headwinds. While a short squeeze could temporarily boost shares, the underlying fundamentals—including a 21% surge in SG&A expenses and $142 million in interest costs—paint a bleak picture.

Investors should proceed with caution. Unless CNM can meaningfully reduce debt, stabilize margins, or deliver top-line growth that translates to profits, this stock remains a risky bet. The data screams caution: proceed with eyes wide open.