- Short-seller interest has fallen to more than a 10-year low, the Financial Times reported, citing Goldman Sachs’ data.
- Short-interest as a proportion of market capitalization for median stock in the S&P 500 hit 1.8% at the start of the year compared to an average of 2.4% for the last 15 years.
- Short positions recorded gains of $375 billion between February and March when markets tanked.
- But mark-to-market losses on short positions hit $383.5 billion since March lows according to S3 partners.
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Short-selling in US stocks has hit the lowest level since records began, as the market’s near-constant upward trajectory in recent months pushes investors away from betting on stocks falling.
This is according to data from Goldman Sachs cited by the Financial Times on Sunday. Short-interest as a proportion of market capitalisation for median stock in the S&P 500 hit 1.8% at the start of August, the FT said.
Short-interest by comparison was 2% at the start of the year, and has averaged roughly 2.4% over the past 15 years.
The US banking giant began tracking short-interest in 2004, and the figures are lowest since it began records, the FT said.
The S&P 500 hit a low of 2237.40 in March when coronavirus lockdowns began to kick in in the Western world. But the index soared in value in recent months. The S&P 500 is up 52% since March
Central banks rolled out generous stimulus relief packages worth trillions of dollars and investors are betting that a coronavirus vaccine will arrive soon, both of which have boosted stocks.
Short positions increased by about $375 billion between February and March, according to S3 Partners.
Mark-to-market losses on short positions now total $383.5 billion since March’s lows.
Stocks with the most amount of short-interest have performed better than the ones with the least amount of interest, the FT said, citing data from IHS Markit.
Short-sellers betting against a number of tech stocks have faced even steeper losses.
Investors that bet against Amazon have suffered losses of $4.6 trillion as the stock is up 78% since the start of the year.
Tesla has been one of the biggest darling’s of stock markets having rallied about 380% since March alone.
But not all short-selling activity is subdued.
Famed short-seller Andrew Left told Business Insider he is aggressively shorting a “crazy stupid” Chinese stock GSX Techedu that has gained more than 320% on the New York Stock exchange in 2020, as he believes it has exaggerated its earnings and will eventually be delisted.
Billionaire short-seller Jim Chanos has reportedly made almost $100 million by betting against the controversial German fintech Wirecard, which collapsed in June following allegations of a $2 billion accounting scandal.