The amount of Polynovo Ltd (ASX: PNV) shares in the hands of short sellers has dropped recently.
Over the week ending 13 December, Polynovo shares had a 7.5% short interest.
However, in The Motley Fool Australia's latest weekly short selling breakdown, the company's short interest had dropped to 7.2%.
At the time of writing, the Polynovo share price is $1.51, 0.2% lower than its previous close.
For context, the S&P/ASX 200 Index (ASX: XJO) is up 0.4% this morning.
Let's take a look at what the company's falling short interest might mean for its long-term investors.
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What does Polynovo's short interest mean for its shares?
The amount of Polynovo's stock held by short sellers has dipped, and it could spell good news for growth investors.
Short sellers aim to profit from a falling share price. Thus, less short selling activity probably means there's greater confidence in the Polynovo share price among some circles.
Perhaps, the rise in apparent confidence is down to its recent performance.
Over the last 30 days, the company's share price has gained 6.6%, boosted by good news released earlier this month.
Polynovo announced it achieved record sales for July and November on 14 December.
It is also recruiting more sales staff in the United States and its search for a new CEO is progressing well.
Additionally, experts are increasingly bullish on the company's stock.
Macquarie recently upgraded its rating for Polynovo's shares to 'outperform', slapping them with a $2.85 price target. That represents an 88% upside on the company's current share price.
As my Foolish colleague, James Mickleboro, recently reported, the broker believes Polynovo's NovoSorb product will be a major catalyst to its growth.
However, the company still sits among the 10 most shorted shares on the ASX. Potentially, due to the stock's performance through 2021.
Since the start of this year, the Polynovo share price has fallen 61%. It's likely many eyes will be on it in the new year in hopes it can correct its tumble.
