16 Most Shorted Stocks Right Now

Published on August 29, 2023 at 7:30 am by Ramish Cheema in Hedge Funds, News

In this piece, we will take a look at the 16 most shorted stocks right now. If you want to skip our introduction to short selling, then take a look at 5 Most Shorted Stocks Right Now.

One of the most intriguing plays on the stock market is short selling. This is because it goes against conventional investment logic, which typically seeks to profit from an increase in share prices. A short seller is betting on a negative share price movement, a risky endeavor that carries the chance of significant losses that can often be twice or thrice the original investment. At the same, the opportunity for a profit is also massive, and often higher than what you would see in a long position.

There are several ways in which one can short the market. The most common one out of these is simply borrowing the shares of a firm to sell them on the market and waiting for a price drop to scoop them up at a lower price to make a profit. Another way to profit from a share price drop is to buy a Put option. A Put is a relatively safer way of shorting a stock. This option, officially called a financial derivative instrument, provides the buyer of an option with the right to sell the underlying security at a predetermined price.

So, for instance, if shares of Firm A are currently trading at $10 and a trader buys a Put with the predetermined security price (the strike price) of $10, then if Firm A’s share price drops to $5 the option will be ‘in the money’ as the option buyer will be able to sell the shares at a higher price. A Put is a safer way to short a stock since it limits the downside to the short seller. This is because these options charge a premium per share which is the amount paid by the option buyer to the seller. If the Put option becomes out of money, i.e. its underlying security or stock rises in value then the option buyer will not exercise the right to sell the shares and the only loss they will make is will be the premium paid. As opposed, full fledged short selling does not provide any hedge whatsoever against a share price gain and the short seller has to pay all of the share price increase in order to repurchase the borrowed shares.

Briefly moving towards the market, one of the biggest short plays this year is the one by Hindenburg Research against Icahn Enterprises L.P. (NASDAQ:IEP). Icahn Enterprises is controlled by the well known billionaire investor Carl Icahn who is renowned for his activist investment approach that sees him take large stakes in firms which he believes are underperforming. However, in a rather strange twist of irony, Hindenburg alleged in its report that Icahn Enterprises was using proceeds from new investments to pay out dividends to old investors and pointed out that Mr. Icahn had followed the trend of several billionaires by taking out loans against his Icahn Enterprise holdings. According to the short seller, these have led to Icahn Enterprises’ stock being overvalued because of improper dividend payments and put Mr. Icahn at risk of being called out by banks should his firm’s stock depreciate. Icahn Enterprises, whose shares have been relatively stable and traded within the $41 – $53 band since 2020, saw the price drop by 20% and it has been unable to regain these losses since then as they are currently trading for $19.90 at the time of writing.

So, are there any more stocks with the potential to be Icahn Enterprises? We took a look and found out that some of the most heavily shorted stocks right now are Novavax, Inc. (NASDAQ:NVAX), Carvana Co. (NYSE:CVNA), and BioXcel Therapeutics, Inc. (NASDAQ:BTAI).

Image by Gerd Altmann from Pixabay

Our Methodology.

For this article, we compiled the top 16 stocks with the highest short interest as a percentage of float. Short interest is the number of shares that have been sold short and remain outstanding and this metric represents the short seller sentiment against a company.

Most Shorted Stocks Right Now

16. Enovix Corporation (NASDAQ:ENVX)

Short Interest Percentage: 26.78%

Enovix Corporation (NASDAQ:ENVX) is a small company that makes and sells batteries. Even though it is one of the most shorted stocks you’re likely to come across, the stock is still rated Strong Buy on average and analysts have penned in an average share price target of $32.09.

20 out of the 910 hedge funds part of Insider Monkey’s Q2 2023 database had held a stake in Enovix Corporation (NASDAQ:ENVX). Out of these, the firm’s biggest shareholder is Peter S. Park’s Park West Asset Management through a stake worth $97 million.

Along with Novavax, Inc. (NASDAQ:NVAX), Carvana Co. (NYSE:CVNA), and BioXcel Therapeutics, Inc. (NASDAQ:BTAI), Enovix Corporation (NASDAQ:ENVX) is one of the most shorted stocks in the U.S. right now.

15. Allogene Therapeutics, Inc. (NASDAQ:ALLO)

Short Interest Percentage: 28.83%

Allogene Therapeutics, Inc. (NASDAQ:ALLO) is a biotechnology company that develops cancer treatments. Its shares are also rated Strong Buy on average, and the average share price target of $16.93 sees a sizeable upside over the current share price of $3.83.

As of June 2023, 22 out of the 910 hedge funds surveyed by Insider Monkey had held a stake in Allogene Therapeutics, Inc. (NASDAQ:ALLO). Michael Rockefeller and Karl Kroeker’s Woodline Partners is the company’s biggest hedge fund shareholder due to its $26.4 million investment.

14. Guess?, Inc. (NYSE:GES)

Short Interest Percentage: 29.74%

Guess?, Inc. (NYSE:GES) is a popular consumer cyclical firm that sells clothes. Its shares nearly reversed all losses of the year in late August following a strong earnings report which beat analyst revenue and profit estimates.

As of 2023’s June quarter, 16 out of the 910 hedge funds profiled by Insider Monkey had held Guess?, Inc. (NYSE:GES)’s shares. Paul Marshall and Ian Wace’s Marshall Wace LLP is the biggest investor among these through a $27.9 million stake.

13. Lemonade, Inc. (NYSE:LMND)

Short Interest Percentage: 29.78%

Lemonade, Inc. (NYSE:LMND) is a global insurance company headquartered in New York City. A boost in interest rates has benefited insurance firms, and Lemonade, Inc. (NYSE:LMND) is no exception as it has beaten analyst EPS estimates in all four of its latest quarters.

Insider Monkey dug through 910 hedge fund holdings for this year’s second quarter and discovered 15 investors in the insurance firm. Lemonade, Inc. (NYSE:LMND)’s largest shareholder in our database is Israel Englander’s Millennium Management since it owns $15 million worth of shares.

12. The Lovesac Company (NASDAQ:LOVE)

Short Interest Percentage: 30.59%

The Lovesac Company (NASDAQ:LOVE) is a furniture company with a presence in more than three dozen American states. It is a rare consumer cyclical stock that has beaten analyst EPS estimates for all four of its latest quarters and the stock is also rated Strong Buy as average.

After scouring through 910 hedge fund portfolios for Q2 2023, Insider Monkey found that 17 had invested in the firm. Out of these, The Lovesac Company (NASDAQ:LOVE)’s largest stakeholder is Paul Marshall and Ian Wace’s Marshall Wace LLP since it owns 587,770 shares that are worth $15.8 million.

11. Cassava Sciences, Inc. (NASDAQ:SAVA)

Short Interest Percentage: 31%

Cassava Sciences, Inc. (NASDAQ:SAVA) is a small biotechnology company that is focusing on developing treatments for Alzheimer’s disease. There seems to be a big tussle between analysts and short sellers for its shares as while the former has penned in an $80 upside to the stock, the latter have shorted 31% of the float.

Insider Monkey’s second quarter of 2023 survey covering 910 hedge fund portfolios revealed that eight had bought the firm’s shares. Cassava Sciences, Inc. (NASDAQ:SAVA)’s largest stakeholder among these is Ken Griffin’s Citadel Investment Group since it holds a $3.7 million stake.

Carvana Co. (NYSE:CVNA), Cassava Sciences, Inc. (NASDAQ:SAVA), Novavax, Inc. (NASDAQ:NVAX), and BioXcel Therapeutics, Inc. (NASDAQ:BTAI) are some stocks with a significant percentage of short interest to its float.

10. Upstart Holdings, Inc. (NASDAQ:UPST)

Short Interest Percentage: 31.62%

Upstart Holdings, Inc. (NASDAQ:UPST) is a financial technology company that uses artificial intelligence to connect debtors and creditors. Analyst sentiment is rather dour for the shares as they are rated Hold on average. However, the shares are up by 129% year to date, so perhaps the short sellers believe there’s plenty of room for them to fall.

By the end of this year’s second quarter, 15 out of the 910 hedge funds part of Insider Monkey’s research had held a stake in Upstart Holdings, Inc. (NASDAQ:UPST). D. E. Shaw’s D E Shaw is the firm’s biggest investor since it owns 2.5 million shares that are worth $92 million.

9. C3.ai, Inc. (NYSE:AI)

Short Interest Percentage: 33.19%

C3.ai, Inc. (NYSE:AI) is an artificial intelligence specific digital transformation firm that enables customers to integrate the technology in their business operations. Despite the fact that it is an AI firm and has beaten analyst EPS estimates for all of its latest quarters, the stock is rated Hold on average as analysts and short sellers seem to agree about its prospects.

Insider Monkey scoured through 910 hedge fund portfolios for 2023’s June quarter to discover that 23 had invested in the company. C3.ai, Inc. (NYSE:AI)’s largest stakeholder is Philippe Laffont’s Coatue Management through its $53.7 million investment.

8. Beyond Meat, Inc. (NASDAQ:BYND)

Short Interest Percentage: 36.64%

Beyond Meat, Inc. (NASDAQ:BYND) is a consumer cyclical firm that makes and sells plant based meat products. It’s perhaps unsurprising that more than a quarter of its float has been shorted since its latest quarter revealed a steep revenue drop and a poor gross margin. Its woes were further fueled by a drop in shipments indicating an inability to gain market share.

By the end of this year’s second quarter, 15 out of the 910 hedge funds surveyed by Insider Monkey had bought Beyond Meat, Inc. (NASDAQ:BYND)’s shares. Out of these, the biggest shareholder is Philippe Laffont’s Coatue Management since it owns 490,640 shares that are worth $6.3 million.

7. Fate Therapeutics, Inc. (NASDAQ:FATE)

Short Interest Percentage: 36.79%

Fate Therapeutics, Inc. (NASDAQ:FATE) is a biotechnology company that develops treatments for cancer and immune system disorders. Despite a high short interest percentage, insiders have bought nearly $700,000 worth of shares over the past 12 months but have suffered from a 73.7% share price drop year to date.

By the end of this year’s second quarter, 23 out of the 910 edge funds polled by Insider Monkey had invested in the company. Fate Therapeutics, Inc. (NASDAQ:FATE)’s largest hedge fund investor is Jeremy Green’s Redmile Group since it owns 13.1 million shares that are worth $62 million.

6. Fisker Inc. (NYSE:FSR)

Short Interest Percentage: 39.48%

Fisker Inc. (NYSE:FSR) is an electric vehicle manufacturer and seller. The firm’s second quarter saw it continue to report losses and also cut its production targets due to supply chain woes.

Insider Monkey’s Q2 2023 survey of 910 hedge funds revealed 11 Fisker Inc. (NYSE:FSR) investors. It joins Novavax, Inc. (NASDAQ:NVAX), Carvana Co. (NYSE:CVNA), and BioXcel Therapeutics, Inc. (NASDAQ:BTAI) in our list of the most shorted stocks right now.

Click to continue reading and see 5 Most Shorted Stocks Right Now.

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