Tesla Tops List of Most Shorted Stocks for Third Month in a Row
LONDON, Sept 12 (Reuters) – Tesla remained at the top of the list for the most shorted large-cap U.S. stocks in August, according to a report by securities lending data firm Hazeltree on Tuesday.
The electric vehicle company saw its stock rise by over 5% on Monday following a note from Morgan Stanley, suggesting that Tesla’s Dojo supercomputer could potentially boost the company’s market value.
Despite this positive momentum, Tesla, along with Charter Communications and Apple, declined to comment on the matter.
Data compiled by research firm Whale Wisdom revealed various strategies employed by short sellers to bet against Tesla. These included investors with funds holding both long and short positions in stocks, such as Diamond Hill, Leuthold Funds, and Forum Funds. Additionally, a Blackstone fund of funds included short positions from other hedge funds and investment managers.
Hedge funds like AQR Capital Management and Federated Hermes used trades to offset market risk by balancing rising and falling prices on different asset classes.
In response to Microsoft co-founder Bill Gates’ short position against Tesla, CEO Elon Musk took to his social media platform X on Monday to express his thoughts. According to a recent biography by Walter Isaacson, Musk stated, “Taking out a short position against Tesla, as Gates did, results in the highest return only if a company goes bankrupt!”
A recent note by Goldman Sachs revealed that hedge funds have been actively shorting U.S. stocks in recent weeks, with total short bets reaching a six-month high.
According to the Goldman note, hedge funds were net short consumer discretionary stocks, including Tesla, for the year ending on September 8.
Dan Izzo, founder of hedge fund Blackbird Capital, shared his personal experience with shorting Tesla, stating, “If I’m honest, I’ve only lost money trying to short TSLA. Not because I’m wrong about it, but because the market can be irrational for longer than I can afford to be proven right.”
Short selling is a strategy where investors borrow shares of a stock and sell them in the hopes of buying them back at a lower price, thereby profiting from the difference. However, shorting can be risky as stock prices can rise unexpectedly, leading to potential losses for short sellers.
Tesla’s consistent presence as the most shorted large-cap U.S. stock indicates the ongoing debate surrounding the company’s future prospects. As Tesla continues to innovate in the electric vehicle market, investors and analysts remain divided on whether the company’s growth and potential justify its current valuation.
The short-selling trend observed in the U.S. stock market reflects broader market uncertainty and the challenges faced by investors in predicting and navigating volatile market conditions.
As Tesla’s stock performance remains under scrutiny, market participants will closely monitor the developments and announcements from the company to assess its future trajectory.
More detail via Reuters here… ( Image via Reuters )