Sequential Brands’ stock jumped almost 2 percent to $8.95 after chairman William Sweedler said the company’s stock price decline was due to short sellers.

In a statement released Monday afternoon, Sweedler said, “Tengram Capital Partners, as the largest shareholder of the company, has been closely monitoring the significant decline in the company’s stock price and associated increase in trading volume. We believe this decline in stock price and related increase in volume is being driven primarily by short sellers. The Securities and Exchange Commission only permits this activity if the short sellers have access to shares that may be borrowed to cover their positions.”

A review of short interest on the Nasdaq Web site shows that in mid-November 2014, there were only 845,038 positions in short interest for a daily volume of 85,718. This year that number is more than double at 2,303,712 and the daily share volume is 322,206 for settlement date of November 13 with 7.14 days to cover.

Investors who were worried that Sequential would suffer the same fate as Iconix began shorting the stock. Over the last three months, Sequential Brands’ stock has dropped 45 percent. Iconix Brands stock price has fallen by 55 percent in the last month after the company said it would have to restate its financials.

Sweedler went on to say, “What you may not know is that you, as a stockholder of the company, may be facilitating the ability of these short sellers to create these positions by permitting your shares to be borrowed. Tengram has instructed its broker that it will not permit borrowing of any of its shares by short sellers who are only interested in reducing the value of the company’s stock price for their short-term gain.  We urge each of you to contact your broker today and inform them that your shares may not be made available to be borrowed by short sellers.”

Hedge funds, long considered the “smart money,” have actually increased their stakes in the company. According to Insider Monkey, at the end of the second quarter, seven hedge funds listed Sequential as a holding and by the third quarter, that number had increased to 10.

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