5 Biggest Short Squeezes of All Time

4. Alibaba Group Holding Limited (NYSE: BABA)

Alibaba Group Holding Limited (NYSE: BABA), the Chinese technology and ecommerce giant, remains one of the most active and shorted stocks on the market. In 2017, in perhaps the most famous short-selling event in the stock history of the Chinese firm, research by S3 Partners LLC showed that short-sellers on Alibaba had lost close to $10 billion throughout the year as the firm consistently beat expectations on revenue and earnings per share. S3 Partners said Alibaba was just behind EV maker Tesla as the most shorted stock on the market in 2017.

Alibaba Group Holding Limited (NYSE: BABA) has remained in the headlines since, with the company recently coming under regulatory scrutiny and founder Jack Ma stirring rumors about his personal freedoms in China. It is also one of the most active foreign stocks on the market in the US. During 2017, as short sellers bet against the firm, the stock climbed a record 65% year-on-year at the end of the second quarter, with revenues rising 56% year-on-year and dampening short-seller expectations further. 

At the end of the first quarter of 2021, 135 hedge funds in the database of Insider Monkey held stakes worth $15.4 billion in Alibaba Group Holding Limited (NYSE: BABA), down from 156 in the preceding quarter worth $17.9 billion. 

In its Q1 2021 investor letter, Polen Capital Management highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) is one of them. Here is what the fund said:

“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”