- Short sellers – or traders who wager on stock declines – are alive and well as markets soar to new highs in 2019.
- High short interest often implies an outright bearish position on a stock, although it can also reflect simple downside hedging.
- Here are the stocks with the highest notional short interest, according to S3 Partners.
- Read more on Markets Insider.
Shorts are in for summer.
As the S&P 500 hits a fresh series of new record highs, traders are ramping up positions set to profit from share declines in some of the market’s most popular companies. The likes of Tesla, Netflix, and more are attracting such wagers.
So-called short sellers bet against shares – and make a profit – by borrowing them from investors who own them, selling them at the market price, and waiting for them to decline before purchasing them back to return to the owner. The higher the short interest is, the more money these traders have in play.
That said, holding a short position on a stock can be extremely expensive and risky. If a stock makes significant gains, short sellers can get squeezed by loss – which meanas they have to buy the shares back for more than they originally paid. And that’s on top of the interest spent holding an open position.
It also must be noted, however, that not all short interest implies a directionally bearish bet on a stock. As financial-analytics firm S3 Partners has pointed out, shorts on long-term market juggernauts like Facebook and Amazon are also frequently used as market-wide downside hedges.
The thinking there is that - since the overall market's direction is so dictated by these heavily weighted companies - it makes sense to purchase a safety net on the individual stocks to avoid broader losses.
In recent months, as the IPO market has caught fire, some of the best-performing newly public stocks have attracted the interest of short sellers. That includes companies like Beyond Meat, which is up 550% since hitting the market.
The situation has gotten so extreme that the company's shares are often more expensive to borrow than they are to own - a rare situation. Even as borrow fees push higher, there's not yet been any sign of shorts exiting the trade.
With all of that established, here are the stocks with the largest notional short interest at present time, ranked in increasing order. All data provided by S3 Partners.
15. Sempra Energy
Ticker: SRE
Market Cap: $41 billion
Short Interest: $2.8 billion
Shares Shorted: 20.9 million
Source: S3 Partners
14. Comcast
Ticker: CMCSA
Market Cap: $190.5 billion
Short Interest: $2.9 billion
Shares Shorted: 70 million
Source: S3 Partners
13. AT&T
Ticker: T
Market Cap: $238 billion
Short Interest: $3.8 billion
Shares Shorted: 31 million
Source: S3 Partners
12. Advanced Micro Devices
Market Cap: $32.7 billion
Short Interest: $3.7 billion
Shares Shorted: 121 million
Source: S3 Partners
11. Fidelity National Information Services
Market Cap: $39 billion
Short Interest: $3.8 billion
Shares Shorted: 31 million
Source: S3 Partners
10. Charter Communications
Ticker: CHTR
Market Cap: $87.3 billion
Short Interest: $4.3 billion
Shares Shorted: 11 million
Source: S3 Partners
9. Fiserv
Ticker: FISV
Market Cap: $35.8 billion
Short Interest: $4.5 billion
Shares Shorted: 50 million
Source: S3 Partners
8. Facebook
Market Cap: $541.97 billion
Short Interest: $4.7 billion
Shares Shorted: 24 million
Source: S3 Partners
7. Bristol-Myers Squibb
Ticker: BMY
Market Cap: $74.1 billion
Short Interest: $4.7 billion
Shares Shorted: 105 million
Source: S3 Partners
6. Visa
Ticker: V
Market Cap: $297.3 billion
Short Interest: $6 billion
Shares Shorted: 35 million
Source: S3 Partners
5. Amazon
Market Cap: $929.6 billion
Short Interest: $6.1 billion
Shares Shorted: 3.2 million
Source: S3 Partners
4. Microsoft
Ticker: MSFT
Market Cap: $1.02 trillion
Short Interest: $6.2 billion
Shares Shorted: 46 million
Source: S3 Partners
3. Netflix
Ticker: NFLX
Market Cap: $159 billion
Short Interest: $6.6 billion
Shares Shorted: 17.8 million
Source: S3 Partners
2. Apple
Ticker: AAPL
Market cap: $912 billion
Short Interest: $8.3 billion
Shares Shorted: 41 million
Source: S3 Partners
1. Tesla
Ticker: TSLA
Market Cap: $40 billion
Short Interest: $9.2 billion
Shares Shorted: 41 million
Source: S3 Partners