In this article, we will discuss the 10 Most Shorted Mid-Cap and Small-Cap Stocks to Buy Now.
Small cap and mid cap stocks have been on a roll in the first half of the year as investors rotate away from mega cap tech stocks. Strong earnings acceleration and easing financing costs have increasingly strengthened investor sentiment in the stocks.
Attractive valuations relative to mega-cap stocks, after years of underperformance, have also fueled demand for small- and mid-cap stocks, given their significant upside potential. Consequently, the Russell 2000 index is up by about 18%, nearly double the 9% gain for the S&P 500. The outperformance signals that the stock market rally is increasingly spreading beyond a handful of big companies, as has been the case in previous years.
Waning expectations of interest rate cuts amid soaring inflationary pressures from higher energy prices are one headwind that continues to curtail gains in mid- and small-cap stocks. Additionally, weaker profitability and heavier debt loads around some companies continue to force investors to trim exposure to small-cap stocks rather than add to them, according to Alex Sagal, investment-strategy analyst at Wells Fargo Investment Institute.
“While this may suggest a turning point in relative performance, we believe this recent momentum is masking weakness in underlying small-cap equity fundamentals,” Sagal wrote.
Nevertheless, the best mid and small-cap stocks are of companies with early-stage businesses that have room to expand in their niche. The stocks are expected to shrug off uncertainty around interest rate cuts and slowing economic growth to generate long-term value. With that in mind, let’s take a look at some of the best and most shorted mid-cap and small-cap stocks to buy now.
Our Methodology
To compile a list of the Most Shorted Mid-Cap and Small-Cap Stocks to Buy Now , we used Finviz and Yahoo stock screeners to identify stocks with significant short interest. From that list, we primarily chose stocks with a short float of 20% or above. We trimmed the list to mid- and small-cap stocks with market caps between $300 million and $10 billion. We further trimmed the list by focusing on stocks with upside potential of more than 20%. These equities were further narrowed down based on their popularity among elite hedge funds, as of Q1 2026. Finally the stocks are ranked based on their upside potential (as of June 2).
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Globant S.A. (NYSE: GLOB)
Short Float: 20.14%
Market Cap: $1.92 Billion
Stock Upside Potential: 22.24%
Number of hedge fund holders: 25
Globant S.A. (NYSE:GLOB) is one of the most shorted mid-cap and small-cap stocks to buy now. On May 19, Mizuho reiterated an Outperform rating on Globant S.A. (NYSE:GLOB) but lowered its price target to $59 from $76.
The price target cut is in stark contrast to the company delivering solid first-quarter results at the high end of its growth guidance, while also raising its low-end 2026 growth guidance. The strong quarterly results came in better than expected, despite soft demand amid weak macroeconomic conditions. Revenue in the quarter was down 0.7% year over year to $607.1 million as adjusted diluted earnings per share came in at $1.50. The company also generated $36.1 million in free cash flow.
According to Mizuho, Globant S.A.’s year-over-year organic constant currency growth bottomed in the fourth quarter of 2025. The research firm expects the company’s organic growth to accelerate throughout the year and inflect positively in the third quarter. Second quarter 2026 revenues are expected to be in the range of $610 million to $616 million, with Non-IFRS Adjusted Diluted EPS between $1.45 and $1.55.
Globant S.A. (NYSE:GLOB) is a digitally-native IT and software development company. It specializes in digital transformation, custom software engineering, and artificial intelligence integration to help global brands reinvent their customer experiences and internal operations.
9. Sarepta Therapeutics Inc (NASDAQ:SRPT)
Short Float: 24.72%
Market Cap: $1.86 Billion
Stock Upside Potential: 25.08%
Number of hedge fund holders: 41
Sarepta Therapeutics Inc. (NASDAQ:SRPT) is one of the most shorted mid-cap and small-cap stocks to buy now. On May 6, Sarepta Therapeutics Inc. (NASDAQ:SRPT) delivered impressive first-quarter results as it bounced back to profitability despite facing commercialization challenges with its flagship gene therapy, ELEVIDYS.
Total revenue in the quarter was $730.8 million, a decrease of $14.1 million from $744.9 million delivered in the same quarter last year. The decline was attributed to lower ELEVIDYS sales volume resulting from the updated label, which specifies treatment only for ambulatory patients. The decrease was partially offset by a $253 million increase in collaboration revenue.
Amid a slight revenue decline, Sarepta Therapeutics bounced back to profitability with non–GAAP net income of $385.4 million, or $3.16 a share, compared to a net loss of $332.5 million, or a loss of $3.42 a share, delivered the same quarter last year. Earnings beat analysts’ expectations of $0.99 a share on revenue of $731 million.
The bounce back to profitability was driven by disciplined cost management and a favorable revenue mix. In addition, the company delivered positive cash flow, with cash and investments totaling $748 million. Consequently, it remains well-positioned to fund its pipeline development without tapping the debt market.
Sarepta Therapeutics Inc (NASDAQ:SRPT) is a global biotechnology company that engineers precision genetic medicines to treat rare neuromuscular diseases, primarily Duchenne muscular dystrophy (DMD). They develop treatments using three main scientific platforms: gene therapy, RNA technologies, and gene editing.
8. Lyft Inc. (NASDAQ:LYFT)
Short Float: 28.29%
Market Cap: $5.64 Billion
Stock Upside Potential: 36.33%
Number of hedge fund holders: 50
Lyft Inc. (NASDAQ:LYFT) is one of the most shorted mid-cap and small-cap stocks to buy now. On May 14, Bernstein SocGen Group reiterated a Market Perform rating on Lyft Inc. (NASDAQ:LYFT) with a $16 price target.
The stance follows discussions with the company’s CEO, David Risher, and CFO, Erin Brewer, centered on the company’s autonomous vehicles and pricing power. The executives reiterated the benefits of a hybrid network and a strategy focused on building deeper relationships with a narrower subset of partners. The Lyft strategy differs from Uber’s broader partner strategy.
The executives also downplayed the North America Rides growth, which decelerated in the first quarter to mid-single digits. According to the executives, growth can fluctuate quarter over quarter. Consequently, they expect growth from higher-end business-to-business services and in international markets.
Lyft delivered another strong first quarter with double-digit year-over-year growth across Active Riders and Gross Bookings. It also achieved $1 billion in cash for the trailing 12 months. Revenue in the quarter increased 14% to $1.7 billion, while gross bookings increased 19% to $4.9 billion.
Lyft Inc. (NASDAQ:LYFT) operates a multi-modal digital transportation network. Primarily known as the second-largest ride-hailing company in the United States, it connects passengers with independent drivers and provides access to public transit, shared bicycles, and e-scooters through a single mobile application.
7. CRISPR Therapeutics AG (NASDAQ:CRSP)
Short Float: 30.48%
Market Cap: $5.23 Billion
Stock Upside Potential: 38.03%
Number of hedge fund holders: 32
CRISPR Therapeutics AG (NASDAQ:CRSP) is one of the most shorted mid-cap and small-cap stocks to buy now. On May 27, research firm Citizens reiterated a Market Perform rating and a $60 price target on CRISPR Therapeutics AG (NASDAQ:CRSP).
The stance comes on the heels of the company maintaining a positive view of in vivo editing in cardiovascular disease. Its clinical data, presented at the European Atherosclerosis Society Congress, continues to draw strong interest in gene-editing approaches. That’s because they offer new modalities that can deliver profound and sustained lipid-lowering effects.
The company continues to advance its diversified portfolio of in vivo gene-editing programs, leveraging its proprietary liver-directed LNP delivery platform. For starters, CTX310®, a therapy targeting angiopoietin-like protein 3 (ANGPTL3), is progressing in a Phase 1b clinical trial for severe hypertriglyceridemia (sHTG) and refractory hypercholesterolemia.
CRISPR Therapeutics is also working on CTX460, for the treatment of alpha-1 antitrypsin deficiency (AATD), and CTX340, which targets angiotensinogen (AGT) for refractory hypertension.
CRISPR Therapeutics AG (NASDAQ:CRSP) develops transformative gene-based medicines using CRISPR/Cas9 gene-editing technology. Its core focus is modifying specific genes to correct the underlying causes of serious human diseases, including genetic disorders, cancers, and autoimmune conditions.
6. Red Cat Holdings Inc. (NASDAQ:RCAT)
Short Float: 26.64%
Market Cap: $2.25 Billion
Stock Upside Potential: 44.89%
Number of hedge fund holders: 23
Red Cat Holdings Inc. (NASDAQ:RCAT) is one of the most shorted mid-cap and small-cap stocks to buy now. On May 27, H.C Wainwright initiated coverage of Red Cat Holdings Inc. (NASDAQ:RCAT) with a Buy rating and a $20 price target.
The research firm remains bullish on the company’s long-term prospects, as it provides a full range of drone, robotic, and maritime defense systems. It develops American-made hardware and software for supporting military, government, and public safety operations across air, land, and sea. The recent acquisition of Apium Swarm Robotics and Canada-based Quaze Technologies has also strengthened its prospects around wireless power.
While operating as an independent unit, Quaze is to continue developing and scaling its wireless power architecture for integration across Red Cat’s Family of systems. The integration seeks to address the remaining barrier to true robotics autonomy.
On the other hand, Red Cat’s maritime division is also ramping into full-rate production of the Variant 7 unscrewed surface vessel, an autonomy platform designed and built for the US and allied defense missions.
Red Cat Holdings Inc. (NASDAQ:RCAT) is a drone technology company that develops and supplies uncrewed systems, software, and robotics for military, government, and public safety operations. Their American-made hardware operates across all domains—air, land, and sea.
While we acknowledge the potential of RCAT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than RCAT and that has 100x upside potential, check out our report about the cheapest AI stock.
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