Short Sellers Look to Profit from Struggling Companies
The prospects of retailers such as GameStop have deteriorated over the course of the COVID-19 pandemic, leading many hedge funds to bet against them by taking short positions.
Shorting a company involves borrowing its shares, selling them at current prices, and then buying them back in the future at what is hopefully a lower price. Essentially, short sellers are betting that the company will underperform in the future.
The 10 Most Heavily-Shorted Stocks of January 2021
The following companies had the highest short interest as of January 29, 2021. Short interest is the % of a company’s shares that have been borrowed and sold, but not yet returned.
|Company||Short Interest (%)||YTD Return (%)||Sector|
|AMC Entertainment||79%||289%||Communication Services|
|Bed Bath & Beyond||65%||41%||Consumer Discretionary|
|Ligand Pharmaceuticals||65%||75%||Health Care|
|National Beverage Corp.||63%||44%||Consumer Staples|
|Tanger Factory Outlet Centers||52%||32%||Real Estate|
Source: YTD returns as of Feb. 2, 2021
Many of the companies on this list are brick-and-mortar based retailers that have struggled to attract business during COVID-19 lockdowns. This includes GameStop, Dillards (Read more...)