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Here Are The Most Shorted S&P And Russell Stocks (Yes, Trulia Is One Of Them)
Earlier today, countless investors who still foolishly believe that in the new normal "fundamentals" matter, screamed out in terror when Zillow announced that it would acquire Trulia for $3.5 billion, a 20% premium to the Friday close, and were suddenly silenced. The reason: with 38% of its float short (making it the 30th most shorted stock in the Russell 2000), this was one of the most dramatic confirmations of what we said was the best trading strategy under the Fed's artificial capital misallocation regime, namely "buying the most hated names to generate the most alpha."
In fact, for the benefit of our readers who also wanted to think like a central planner, criminal or five year old (or all of the above combined) we started compiling the list of most shorted stocks some time back in 2012. It was then that we said:
By now it should be no secret that under the New Centrally-Planned Normal, good is great, but worst is far greater. It is therefore no surprise that in the past year, some of the highest returning stocks have been the companies which have seen wave after wave of shorts come in, attempting to ride the underlying equity value to zero, only to see themselves scrambling to cover short squeezes, generated either due to the pull of borrow by an overeager shareholder, or due to bad news not being horrible enough, leading to short covering ramps.
Since then the most shorted stock category continues to make fools out of all those who still believe that under ZIRP things like cash flow, earnings growth, covenant, leverage, or going concern matter (as they experienced most recently today with TRLA), and have outperformed the broader market by several orders of magnitude.
So for all those who still believe that the market has quite a ways to go under the yoke of the Fed's centrally-planning before it all crashes into a house of rigged cards, here is the list of the most shorted stocks in the S&P 500 and Russell 2000, sorted by descending short interest as a % of float.
First, the S&P 500:
And the Russell 2000:
Source: CapitalIQ
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thanks Tyler this is like the menu at Nobu deliciously overpriced entrees,
i bought some Zillow today at $164... Jeff Macke was foaming at the mouth about it, people say he does alot of coke, but I don't think so...?
This is why I always wear a belt, so no one can grab my pants and yank them down to bare my bum and meat and veggies (back in the day we called it getting "shorts'ed").
I would expect everyone of these to get bought out soon on our way up to S&P 3k!!
SERIOUS QUESTION:
WHY ISN'T LINKEDIN ON ONE OF THESE LISTS?
At this point I would be genuinely shocked if by 2016 AMZN had not bought out NFLX
Why? For their technology? For their customers? For ... ?
I was thinking more like 'For the lulz'
DO and RIG, going balls long bitches.
Did somebody say "Let's start a Most Shorted ETF" ?!?!?!
Oh yeah, bro, up high! [high five]
What, no Defense Stocks on the list?
Hmmm
jb
Thanks for the list. I'll all in!!
Well, I would guess that there's some kind of "one percent elite" playing these equities like horses. From Wall St. readings, I know that shorters are "bad boys" in a purely social mechanism. So with a smaller pool of risk takers only the dirtiest shall play.
Add to that a third set of business-trained non-mathemacians operating on stodgy 'buy, hold, sell' routines. They will cite an Animal Spirit to justify a thousands-of-shares decision.
Then all three groups are given High Speed Trading tools. Instant no thinking!
If something is shorted by more than roughly 8%, some of the vultures try that short squeeze. (Never the best of images when thinking in metaphor.) You buy, and bid things up, and those that promised to sell things to you low keep getting a taller gap that comes out of their own pocket. So they give up in a mini-panic and "close the short". Then, of course, you have won a brief extra moment of up to sell things back to the next sucker.
HFT machines might blow this all up by introducing an error to pounce upon.
Yay!
I look at the names of some of these strange companies I've never heard of..."Jakks"?...and "GameStop"??...that don't seem to PRODUCE anything...
...and go WTF...!?
There is no real growth anymore. They're not businesses. Gambling counters....?