In this article, we discuss the 5 best high short interest stocks to buy now. If you want to read about some more high short interest stocks, go directly to 10 Best High Short Interest Stocks to Buy Now.
5. SmileDirectClub, Inc. (NASDAQ:SDC)
Number of Hedge Fund Holders: 9
Short Interest as of November 14: 21.19%
SmileDirectClub, Inc. (NASDAQ:SDC) operates as an oral care firm. It is one of the most shorted stocks to consider investing in. The company posted earnings for the second quarter of 2022 on August 8, reporting losses per share of $0.17, missing market estimates by $0.02. The revenue over the period was $126 million, down more than 26% compared to the revenue over the same period last year and missing market estimates by $15.8 million. The firm said it expected full year revenue of up to $500 million versus estimates of more than $600 million.
At the end of the second quarter of 2022, 13 hedge funds in the database of Insider Monkey held stakes worth $10 million in SmileDirectClub, Inc. (NASDAQ:SDC), compared to 18 in the preceding quarter worth $27 million. However, just 9 funds reported having stakes in the company at the end of the September quarter.
4. bluebird bio, Inc. (NASDAQ:BLUE)
Number of Hedge Fund Holders: 22
Short Interest as of November 14: 29.55%
bluebird bio, Inc. (NASDAQ:BLUE) is a biotechnology company that researches, develops, and commercializes transformative gene therapies for severe genetic diseases. It is one of the most shorted stocks to consider investing in. On October 4, bluebird bio disclosed that it is collaborating with Real Endpoints to provide health plans with access to an outcomes-based agreement for β-thalassemia gene therapy Zynteglo through the Real Endpoints marketplace.
At the end of the second quarter of 2022, 22 hedge funds in the database of Insider Monkey held stakes worth $78.9 million in bluebird bio, Inc. (NASDAQ:BLUE). The number of hedge funds having stakes in the company remained the same at the end of the September quarter, according to Insider Monkey’s latest database for the third quarter.
3. Playtika Holding Corp. (NASDAQ:PLTK)
Number of Hedge Fund Holders: 31
Short Interest as of November 14: 21.29%
Playtika Holding Corp. (NASDAQ:PLTK) develops mobile games in the United States, Europe, the Middle East, Africa, the Asia Pacific, and internationally. It is one of the most shorted stocks to consider investing in. On August 29, Playtika noted the launch of its tender offer to purchase up to $600 million worth of shares of its common stock. The offer reaches up to just over 51.8 million shares of common stock for $11.58 each in cash.
On August 5, Cowen analyst Doug Creutz maintained an Outperform rating on Playtika Holding Corp. (NASDAQ:PLTK) stock and lowered the price target to $31 from $35, noting that the lowered estimates were in line with management’s new guidance, which appears reasonable given current market conditions.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Rima Senvest Management is a leading shareholder in Playtika Holding Corp. (NASDAQ:PLTK) with 6.6 million shares worth more than $86.8 million.
2. Wayfair Inc. (NYSE:W)
Number of Hedge Fund Holders: 31
Short Interest as of November 14: 28.54%
Wayfair Inc. (NYSE:W) engages in the e-commerce business in the United States and internationally. It is one of the most shorted stocks to consider investing in. On October 13, Wayfair declared that it has hosted a second Way Day this year beginning at 12:00 a.m. on October 26. The customers took advantage of massive discounts of up to 80% off items spanning furniture and decor, housewares, seasonal decor and more.
On October 31, Truist analyst Naved Khan maintained a Buy rating on Wayfair Inc. (NYSE:W) stock and lowered the price target to $60 from $96, noting that the company expects Q3 results to come in line with muted expectations as inflationary trends and reopening headwinds pose challenges to growth.
At the end of the second quarter of 2022, 22 hedge funds in the database of Insider Monkey held stakes worth $630.5 million in Wayfair Inc. (NYSE:W), compared to 27 in the preceding quarter worth $1.4 billion.
However, hedge fund sentiment around the stock skyrocketed during the third quarter as 31 funds in our database reported having stakes in the company at the end of the September quarter.
In its Q2 2022 investor letter, Value Vulcan Partners, an asset management firm, highlighted a few stocks and Wayfair Inc. (NYSE:W) was one of them. Here is what the fund said:
“We sold Wayfair Inc. (NYSE:W) during the quarter. It was a mistake. Wayfair Inc. is a leading e-commerce retailer of home goods and furnishings. Before our initial investment, we watched Wayfair build its business. As customers increased, revenue per customer expanded, and the company grew year over year. Wayfair invested heavily in its logistics network to handle big and bulky furniture from freight forwarding all the way to last-mile delivery. We believed this created a positive flywheel.
Wayfair became a more cost-effective distribution channel for suppliers, reduced delivery times to customers, and improved its customer shopping experience. Nonetheless, at the time, Wayfair did not produce free cash flow, and therefore it did not qualify for investment. During the pandemic, consumer behavior changed, and as a result, the company’s margins and free cash flow reached levels previously not expected for many years to come. We believed the competitive dynamics had changed for the long term in favor of Wayfair and the company qualified for investment.
We initially purchased Wayfair in the fourth quarter of 2020. Although we knew Wayfair would face difficult comparisons post-COVID, we believed the company would continue to generate free cash flow and its value would continue to be stable. The recent combination of persistently high levels of inflation, a possible recession, and the company’s commitment to continue investing heavily for future growth has resulted in negative free cash flow. We believe sustainable free cash flow is the key ingredient to long-term value stability and the company’s future free cash flow is in question. Therefore, we followed our discipline and sold Wayfair.”
1. Chewy, Inc. (NYSE:CHWY)
Number of Hedge Fund Holders: 25
Short Interest as of November 14: 27.59%
Chewy, Inc. (NYSE:CHWY) engages in the pure play e-commerce business in the United States. It is one of the most shorted stocks to consider investing in. On October 20, Chewy declared that it is expanding its insurance and wellness offerings, CarePlus, using Lemonade’s newly provided plans of pet healthcare insurance products. On November 1, Stella and Chewy will be offering adoption fee reimbursement for senior pets age 5+ rescued from any shelter across the US and Canada through the month of November.
On October 31, Citi analyst Steven Zaccone maintained a Neutral rating on Chewy, Inc. (NYSE:CHWY) stock and lowered the price target to $43 from $44, noting that macro fears are high for retail coverage heading into Q3 earnings season.
At the end of the third quarter of 2022, 25 hedge funds in the database of Insider Monkey held stakes in the company.
In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Chewy, Inc. (NYSE:CHWY) was one of them. Here is what the fund said:
“We exited our position in Chewy, Inc. (NYSE:CHWY), in the consumer discretionary sector. While we continue to have a favourable opinion of the online pet products retailer, we decided to consolidate our exposure to the pet industry.”
You can also take a peek at 12 Best Blue Chip Stocks To Buy Today and 10 Best Auto Stocks To Buy Now.
