Hedge funds piling into a stock is a signal of conviction. After all, if institutional investors are backing a company, there has to be a good reason for it, right?

Things get interesting when the same stock ends up with a high short interest. Where some investors back the company to become successful, others bet on its downfall. This contradiction is often eagerly tracked by investors, as it can potentially lead to explosive moves to either side.

Consider, for instance, a scenario where a stock with a high short interest and a high hedge fund holding starts going up. As everyone rushes to buy more of the already popular stock, short sellers rush to close their positions, triggering a strong bull rally.

We decided to shortlist stocks that were the most likely candidates for such a rally. To come up with our list of 15 most crowded hedge fund stocks that are targeted by short sellers, we only considered stocks with a market cap of at least $1 billion and a short interest of at least 3%. We then ranked these stocks by the number of hedge funds that have the stock in their portfolio.

15. Quanta Services, Inc. (NYSE:PWR)

Number of Hedge Fund Holders: 67 

Short Interest:  3.42%

Quanta Services, Inc. operates as an infrastructure solutions provider. It offers its solutions for the pipeline, electric, and gas utility, communications, energy, and renewable energy industries. The company operates through Electric Power Infrastructure Solutions, Renewable Energy Infrastructure Solutions, and Underground Utility and Infrastructure Solutions segments.

Puerto Rico recently experienced a significant power outage affecting nearly 1.4 million customers, with 400,000 also losing access to water. Luma Energy, which is a joint venture between Canadian energy firm ATCO and Quanta Services, reported that vegetation on transmission lines and technical issues caused the blackout. Power was restored to 56.3% of the company’s total customers by 1 p.m. EST.

An analyst at Piper Sandler recently started coverage on the company with an Overweight rating. The firm showed optimism for the stock despite the recent outage. It named PWR as its top pick, amidst short-term uncertainties about recent policy shifts.

Kashy Harrison pointed to the company’s track record by saying:

“Quanta Services has met or exceeded quarterly street EPS expectations every quarter since 3Q’19. It is the market leader in T&D [transmission and distribution] and renewable generation services, with potential upside from electrical system work for data centers and onshoring of manufacturing supply chains via the Cupertino acquisition.”

14. HEICO Corporation (NYSE:HEI)

Number of Hedge Fund Holders: 67

Short Interest:  4.02%

HEICO Corporation is an aerospace and defense company. Its stock has outperformed the market so far this year, but a high short interest is keeping investors on edge. HEI trades at a PE of 65, above its 5-year average of 60.4. This high valuation is in part driving the short sellers’ confidence, though the hedge funds aren’t buying the stock without reason either.

HEI is one of those stocks where the active management itself has a stake. The Mendelson family has been running the company for well over three decades and hasn’t done a bad job. Moreover, the stock incentives structure for employees means every employee feels a part of the company, preferring to take stock when given the opportunity.

It is the future growth that is keeping the valuation high in HEICO’s case. The company’s Flight Support Group has grown at a long-term average of 7% while other segments have shown even better growth in the recent past. Operating margins continue to go up, once again demonstrating the management’s abilities. So, what are the short sellers looking at in the stock?

HEICO has a solid business, and its growth rate is impressive. However, the October quarter last year failed to deliver the expected numbers and could well have raised some short-term concerns. The management pinned it on inventory destocking, and short sellers are possibly thinking the high valuation wasn’t justified. The stock fell considerably in the months after that earnings announcement, but has almost regained all the losses, mainly due to the proven strength of the business.

13. Occidental Petroleum Corporation (NYSE:OXY)

Number of Hedge Fund Holders: 68

Short Interest:  3.65%

Occidental Petroleum Corporation explores, acquires, and develops oil and gas properties. The company generates its revenue through Chemical, Oil and Gas, and Midstream & Marketing segments. The stock price has struggled so far, dropping over 21% this year.

OXY was recently downgraded by Raymond James from Strong Buy to Outperform due to short-term uncertainty over oil prices. The firm also lowered its target price from $81 to $64. However, analyst John Freeman highlighted that the company expects continued improvements in its CrownRock assets. It also anticipates cost savings of over $1 million per well.

The company’s 1PointFive subsidiary secured approval from the U.S. Environmental Protection Agency (EPA) last month. This approval is for Class VI permits, allowing the firm to store carbon dioxide from its STRATOS Direct Air Capture facility in Texas. The facility aims to capture over 500,000 metric tons of CO2 annually and is projected to start its commercial operations in 2025.

Occidental’s President and CEO, Vicki Hollub, mentioned:

“The Class VI permits are a catalyst to unlock value from carbon dioxide and advance Direct Air Capture technology as a solution to help organizations address their emissions or produce vital resources and fuels.”

12. Global Payments Inc. (NYSE:GPN)

Number of Hedge Fund Holders: 71

Short Interest:  3.14%

Global Payments Inc. operates as a software solutions and payment technology provider. The company operates in the Issuer Solutions and Merchant Solutions segments. It offers sales and deployment, authorization, customer support, reconciliation and dispute management, and other services.

RBC Capital Markets recently downgraded the stock from Outperform to Sector Perform, citing concerns over the company’s sale of the Issuer Solutions business and planned acquisition of Worldpay. The investment bank also lowered its target price from $139 to $86. Analysts are cautious over the deal’s potential success, highlighting potential distractions for management and execution risks.

Analyst Dan Perlin noted:

“We believe large ‘Scale Motivated’ transactions designed to protect an incumbent position and fend off more nimble innovators tend to be very long battles and haven’t proven to be overly successful.”

For 2025, the company expects adjusted net revenue growth of 5% to 6% on a constant currency basis. The Merchant Solutions segment is anticipated to grow around 6%, along with the Issuer Solutions division’s projected growth of approximately 4%. Adjusted operating margins are predicted to increase by 50 basis points for the year. Global Payments announced a share repurchase plan worth $250 million to optimize shareholders’ return.

11. Expand Energy Corporation (NASDAQ:EXE)

Number of Hedge Fund Holders: 71

Short Interest:  3.54%

Expand Energy Corporation is an independent natural gas production company in the United States. It acquires, explores, and develops properties to produce natural gas, oil, and natural gas liquids.

Regardless of the increase in crude oil prices, short sellers raised their bets against oil and gas stocks. Amidst this industry-wide trend, EXE itself has a short interest of 3.54%. Despite this bearish sentiment, the firm received an upgrade last month.

KeyBanc recently upgraded EXE from Sector Weight to Overweight with a price target of $130. Analyst Tim Rezvan highlighted that the company is well-positioned to grow with its investment-grade rating and stable natural gas outlook.

Expand Energy reaffirmed its fiscal 2025 guidance. Management anticipates production to be 7.2 billion cubic feet equivalent per day by the end of 2025. To boost productive capacity for 2026, the company plans to invest $300 million. Aided by increasing data center and LNG demand, the firm anticipates stable natural gas prices. It also reiterates flexibility to change its plans based on market conditions.

10. NIKE Inc. (NYSE:NKE)

Number of Hedge Fund Holders: 73

Short Interest:  4.35%

Nike is a well-known brand that sells athletic footwear, equipment, and accessories, among other products. The stock has a high short interest, and a 1-year stock performance of -38% reflects that perfectly.

The company reported a revenue drop in Q3 2025, but matters were made worse by declining gross margins as a result of tariffs. The new CEO has only been in office for just over half a year so investors may want to give him a little more time to work on the turnaround.

Nike is preparing to launch its new brand SKIMS in collaboration with Kim Kardashian. The firm is attempting to do something big with this move, and has even turned this brand into a separate segment, to be run outside its major departments like basketball and running. Negotiations on the brand’s launch have been going on for nearly two years, and things finally seem to be falling in place for both the brand and Nike.

9. Schlumberger Limited (NYSE:SLB)

Number of Hedge Fund Holders: 80

Short Interest:  4.48%

Schlumberger Limited operates as a technology provider for the global energy industry. It generates its revenue through Well Construction, Digital & Integration, Production Systems, and Reservoir Performance segments. Despite having a short interest of 4.48%, the stock is in 80 hedge funds’ portfolios.

In Q1, the company reported underwhelming results, indicating a 3% year-on-year revenue decline. International revenue declined by 5% due to decreased activity in Saudi Arabia, Mexico, and Russia. However, North America revenue saw an increase of 8% year-on-year.

CEO Olivier Le Peuch mentioned:

“We expect global upstream investment to decline compared to 2024, with customer spending in the Middle East and Asia being more resilient than in other regions.”

Based on the latest quarter’s earnings, the firm anticipates revenue to be flat in Q2 2025. Under current market conditions adjusted EBITDA margin is expected to expand by 50 to 100 basis points. However, for the latter half of the year, the company projects revenue growth to be flat to mid-single-digit. This growth will be aided by new deepwater startups, growth in the digital and data center business, and seasonal activity increases.  Margins are also projected to improve during the second half of the year.

8. Chevron Corporation (NYSE:CVX)

Number of Hedge Fund Holders: 81

Short Interest:  3.51%

Chevron Corporation is involved in integrated chemicals and energy operations. It generates its revenue through the Downstream and Upstream segments. Recently, the firm’s CEO expressed concerns about potentially leaving Venezuela. He warned that the US could allow Russian and Chinese companies to fill the void.

Due to economic concerns, the company’s CEO anticipates a potential slowdown in global oil demand growth. However, he mentioned Chevron’s record-breaking U.S. production. He also noted some headwinds, including diminishing U.S. refining capacity and issues with refilling the Strategic Petroleum Reserve (SPR).

CEO Mike Wirth highlighted:

“We delivered record U.S. production in 2024 and expect it to grow again by 100,000 barrels in 2025. Chevron is growing production by over 50% over just the next two years in the Gulf of America, with plans to reach a million barrels daily in the Permian Basin.”

The company maintained its annual share repurchase plan worth $10 billion to $20 billion. For Q2, share repurchase is anticipated to be in the range of $2.5 billion and $3 billion. Aided by new production from FGP and other key projects, additional free cash flow is expected to reach $10 billion by 2026. The firm aims to achieve $2 billion to $3 billion in cost savings by 2026.

7. Starbucks Corporation (NASDAQ:SBUX)

Number of Hedge Fund Holders: 84

Short Interest:  3.15%

Starbucks Corporation is a marketer, roaster, and retailer of coffee. It operates in the International, North America, and Channel Development segments. The company’s stores provide tea, coffee, single-serve products, roasted whole beans and ground coffees, and different food products.

As per the recent earnings report, the firm fell short of expectations. Due to a 2% drop in comparable transactions, global comparable store sales went down by 1%. However, the firm managed to improve its consolidated net revenue by 2.3%. Despite missing targets, Starbucks saw a slight turnaround under the new CEO, Brian Niccol.

CEO Brian Niccol pointed out the turnaround:

“My optimism has turned into confidence that our Back to Starbucks plan is the right strategy to turn the business around and to unlock opportunities ahead. Improving transaction comp in a tough consumer environment at our scale is a testament to the power of our brand and partners getting ‘Back to Starbucks.’ We are on track, and if anything, I see more opportunity than I imagined.”

Heading into 2025, management remains confident in its Back to Starbucks strategy to grow and stabilize the business. However, the company did not disclose the detailed financial outlook for upcoming quarters. Recovery and international expansion are major priorities, with 8 out of the top 10 markets indicating improvement in sales. Moreover, the company plans to enhance operational efficiency.

6. Delta Air Lines, Inc. (NYSE:DAL)

Number of Hedge Fund Holders: 84

Short Interest:  3.39%

Delta Air Lines, Inc. offers scheduled air transportation for cargo and passengers. It generates its revenue through the Refinery and Airline segments. The company also provides repair, aircraft maintenance, engineering support, and overhaul services. Jefferies downgraded the stock last month from Buy to Hold. The firm is cautious as the consumer sentiment remains weak, and tariffs could continue to impact investor outlook negatively.

Delta Air Lines exceeded earnings expectations in Q1 financial results. But due to macroeconomic conditions, it lowered its full-year guidance. CEO Ed Bastian said that growth has come to a slowdown amid widespread economic uncertainty surrounding global trade.

CEO Ed Bastian mentioned:

“In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control. This includes reducing planned capacity growth in the second half of the year to flat over last year, while actively managing costs and capital expenditures.”

As per the adjusted guidance, the firm expects revenue growth from -2% to +2% year-over-year for Q2. Operating margins are projected to be in the range between 11% to 14%. Low single-digit year-over-year growth is anticipated in costs for nonfuel units. To balance supply and demand, the company plans to decrease capacity growth in the latter half of the year.

5. Constellation Energy Corporation (NASDAQ:CEG)

Number of Hedge Fund Holders: 85

Short Interest:  3.34%

Constellation Energy Corporation operates as a seller and producer of energy products and services. The company operates through Midwest, ERCOT, Mid-Atlantic, New York, and Other Power Regions.

Citi upgraded Constellation Energy last month from Hold to Buy and assigned it a price target of $232. According to the firm, with the recent share price dip, the stock’s risk-reward ratio seems more appealing. Citi analyst Ryan Levine also mentioned some factors driving his upgrade, including natural gas builds in Texas, downward protection from power price fluctuations, co-location deals, and a favorable stock issuance by Calpine.

On the back of the increasing demand for energy from AI applications, the company reiterated its full-year adjusted earnings guidance. As per the guidance, the firm anticipates EPS between $8.90 to $9.60. The company’s planned acquisition of Calpine is expected to be completed by the end of this year. It is also redirecting its focus to potential data center projects linked to the US electrical grid.

CEO Joseph Dominguez highlighted in the earnings conference call:

“On-grid sales are increasingly attractive to us and to our customers, but we still believe that behind-the-meter configurations will make sense for some customers.”

4. Capital One Financial Corporation (NYSE:COF)

Number of Hedge Fund Holders: 89

Short Interest:  5.94%

Capital One Financial Corporation is a financial services holding company. It provides different financial products and services. The company generates its revenue through Consumer Banking, Credit Card, and Commercial Banking divisions.

The US automotive industry will likely encounter significant challenges due to President Trump’s recently announced tariffs on imported vehicles and parts. The auto tariff imposition is likely to affect consumers through increased vehicle prices, reduced purchasing power, and increased financial pressure. It will lead to reduced consumer spending, negatively affecting the company’s revenue.

Capital One’s CEO, Richard Fairbank, recently commented:

“If the tariff wars sort of really continue on, the auto business is I think might be really quite impacted because the immediate effect would be an almost certain increase in vehicle prices. And that would have sort of mixed effects on auto credit.”

“But with production costs rising, supply chain costs rising, you could just really end up with vehicle value disruption in the business.”

The firm received an upgrade from BTIG with an increased recommendation from Neutral to Buy and a price target of $208. The upgrade was based on the potential for the company’s acquisition of Discover Financial. The high short interest in the stock is probably a result of the merger arbitrage bets by hedge funds.

3. Apollo Global Management, Inc. (NYSE:APO)

Number of Hedge Fund Holders: 90

Short Interest:  5.29%

Apollo Global Management, Inc. operates as a private equity firm. It focuses on investments in infrastructure, credit, private equity, secondaries, and real estate markets. According to a recent deal, the company plans to acquire Hav Energy LNG Holding AS, a maritime liquefied natural gas (LNG) infrastructure platform. The financial details of this deal were not released.

JPMorgan recently maintained its Overweight rating on the stock after the release of its first quarter 2025 earnings. However, the firm lowered its price target from $161 to $151 due to the company’s lower-than-expected financial results.

Chairman and CEO Marc Rowan highlighted:

“In Asset Management, we generated record organic inflows, strong origination volume, and delivered solid investment performance across all major strategies. In Retirement Services, consistent with our longstanding approach of positioning the business to seize opportunity, we accelerated new business growth and invested conservatively to be able to redeploy into widening spreads.”

The company maintained its 2025 guidance, indicating mid-single-digit growth for spread-related earnings (SRE) and a 15% to 20% increase for FRE. With a significant $64 billion in dry powder, the firm is poised to deploy capital and boost future growth through proprietary origination.

2. Vertiv Holdings Co (NYSE:VRT)

Number of Hedge Fund Holders: 92

Short Interest:  3.45%

Vertiv Holdings Co. specializes in manufacturing, designing, and servicing critical digital infrastructure technologies and equipment for communication networks, data centers, and commercial and industrial environments. The company was eliminated from the list of shared favorites in the fourth quarter.

The firm recently reported its Q1 2025 financial results, indicating better-than-expected earnings. Fueled by higher volumes and operational leverage, operating margin saw an expansion of 130 basis points year-over-year. In the APAC and Americas regions, the strongest revenue growth was recorded. The company demonstrated a robust operational and free cash flow performance, as net leverage improved to 0.8x. Its solid financial position offers flexibility for investment and future growth.

Based on strong earnings, management increased its fiscal 2025 organic sales growth guidance. Aided by a robust pipeline and backlog growth, the company now expects organic sales to grow by 18%. EPS is anticipated to grow by 25% year-over-year. Because of projected tariff impacts, adjusted operating margin guidance was reduced by 50 basis points. For the second quarter, the firm projects organic sales growth of 21% year-over-year.

1. Marvell Technology, Inc. (NASDAQ:MRVL)

Number of Hedge Fund Holders: 105

Short Interest:  3.08%

Marvell Technology, Inc. operates as a data infrastructure semiconductor solutions provider. It covers the entire data center to edge infrastructure. The company offers single or multiple-core processors, a portfolio of Ethernet solutions, and custom application-specific integrated circuits.

Despite tariff concerns over tech companies, J.P. Morgan analysts identified the firm as a top pick. Analysts believe that most first-quarter earnings within the industry will meet targets. However, trade and tariff-related dynamics may lead to weaker results in the latter half of the year.

J.P. Morgan analysts, led by Harlan Sur, highlighted their concerns:

“We expect 1Q earnings season to kick off the negative earnings revision cycle with overall forward 12-month EPS estimates to be potentially cut by ~15-25% over the next two-three earning seasons, which we believe should help the semi stock bottoming process. With stocks having already declined by approximately 25% since the tariff concerns surfaced, we see the potential for further 10-15% downside in stocks over the next few months.”

Oppenheimer analyst Rick Schafer also maintained his top picks in the semiconductor industry, including Marvell as his favorite stock. The analyst thinks that AI is the safest growth vector regardless of the macroeconomic backdrop.

Schafer mentioned:

“We see tariff-related price hikes most acutely impacting end-demand for consumer products like PCs/ smartphones.”

While we acknowledge the potential of MRVL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than MRVL but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.