On January 27, Sherry Paul, a senior portfolio manager at Morgan Stanley, appeared on CNBC’s ‘Closing Bell’ to discuss whether more volatility is ahead, following a volatile week in the market. Paul clarified that volatility is a standard part of investing that signifies something emergent rather than something inherently bad. She believes that the market is moving away from the ‘Magnificent Seven’ and toward what she calls ‘magnificent thematics.’ These themes include the new world order, AI automation, innovation, and longevity. By following these trends, Paul suggested that investors can identify specific sector weightings to overweight rather than simply moving their assets into cash.

Paul also argued that the MAG7 are more important than ever, but their nature is changing from single-focus companies into diversified holding companies. She pointed out the distortion in traditional sector labeling and noted that tech companies are now making movies, while consumer discretionary companies are launching rockets and developing point-and-click technologies. Because of this, she recommended an equal-weight approach for traditional ETF investors to avoid over-concentration, while acknowledging that significant value is still set to be unlocked within these large firms and the energy sector. For the investment strategy for 2026, Paul advised leaning into the other 473 stocks in the S&P 500 rather than staying overweight in mega-caps. Her core thesis is that every company, regardless of its industry, is now effectively a technology company. She warned that businesses failing to understand AI’s application to their specific models will face extinction events.

That being said, we’re here with a list of the 11 best high short interest stocks with biggest upside potential.

Our Methodology

We sifted through the Finviz stock screener to compile a list of stocks with a short percentage of float between 15% and 25%. We then selected 11 stocks that had an upside potential of over 45%. The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q3 2025.

Note: All data was sourced on January 27. 

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that 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).

11 Best High Short Interest Stocks With Biggest Upside Potential

11. Apellis Pharmaceuticals Inc. (NASDAQ:APLS)

Number of Hedge Fund Holders: 49

Average Upside Potential: 47.33%

Apellis Pharmaceuticals Inc. (NASDAQ:APLS) is one of the best high short interest stocks with biggest upside potential. On January 21, Bank of America analyst Tazeen Ahmad upgraded Apellis to Buy from Neutral with an unchanged price target of $28. BofA maintains that the market is currently undervaluing Empaveli’s commercial prospects in treating rare kidney diseases, citing a robust launch trajectory that has already secured 267 new patient start forms since its late July approval. This initial 5% penetration of the 5,000-patient US market has encouraged analysts to forecast continued upside for financial estimates as the drug expands into new indications.

A day before that, Wells Fargo reduced its price target for Apellis Pharmaceuticals Inc. (NASDAQ:APLS) to $26 from $29 while maintaining an Overweight rating, primarily due to a slower-than-anticipated commercial ramp for Empaveli in C3G and IC-MPGN indications.

Consequently, the firm has cut its 2026–2030 revenue estimates by 20% to 50% to reflect a more gradual adoption curve. However, the estimates for Syfovre remain largely unchanged as the market awaits further proof of its performance in the permanent functional shift launch.

Apellis Pharmaceuticals Inc. (NASDAQ:APLS) is a commercial-stage biopharmaceutical company that discovers, develops, and commercializes novel therapeutic compounds to treat diseases with high unmet needs.

10. Vera Therapeutics Inc. (NASDAQ:VERA)

Number of Hedge Fund Holders: 36

Average Upside Potential: 55.09%

Vera Therapeutics Inc. (NASDAQ:VERA) is one of the best high short interest stocks with biggest upside potential. Earlier on December 19, Bank of America raised its price target for Vera Therapeutics from $48 to $66 while maintaining a Buy rating due to an increased peak revenue forecast for its lead IgAN drug from $1.7 billion to $2.2 billion. This upward revision stemmed from higher expected pricing based on class competitors and a strengthened net cash position of $680 million following a recent equity raise, which the firm believes positions Vera Therapeutics for a robust commercial launch in mid-2026.

On the same day, Goldman Sachs increased its price target for Vera Therapeutics from $55 to $95 with a Buy rating in light of a substantially expanded TAM. The revision followed the FDA approval and premium pricing of Otsuka’s Voyxact, which suggested much higher pricing potential for the APRIL/BAFF inhibitor class in treating IgAN than previously anticipated.

Furthermore, JPMorgan adjusted its price target for Vera Therapeutics Inc. (NASDAQ:VERA) to $96 from $99 with an Overweight rating on the stock following a broader model update across the firm’s small-to-mid-cap biotech coverage group.

Vera Therapeutics Inc. (NASDAQ:VERA) is a clinical-stage biotech company that develops and commercializes transformative treatments for patients with serious immunological diseases.