According to the latest Ortex report, short sellers lost big in June, taking a $37 billion hit that month alone.
“Short-sellers had a very difficult month in June as stocks soared.
In the aggregate, the bears lost $37 billion in June.
For the fourth time this year and the second month in a row, Tesla (NASDAQ:TSLA) was the biggest loser for short sellers.
Bears lost over $5.6 billion in the stock throughout June. Since the beginning of the year, Tesla has risen 162.3%, with shares of the electric vehicle giant up by 30.4% in June.
Whilst there have been fluctuations in Tesla’s short interest level throughout June, the net result shows bears are again mostly unchanged, as ORTEX data shows short interest marginally fell to 91.91 million shares, or 3.39% of free float.”
One of the most prominent stock in the top 10 list of most likely ‘short squeeze candidates’ is AMC Entertainment (NYSE:AMC), currently boasting a 95 short score.
According to Ortex, ‘Short Score’ uses a multi-factor model that incorporates multiple short-related metrics, with a higher score indicating that the stock is heavily-shorted and has other characteristics that increase the possibility of a short squeeze occurring.
Analytics firm S3 Partners provided us with a new report end of June stating that short sellers have lost roughly $120 billion this year.
Short Sellers Lose $120 Billion This Year
The report from S3 Partners shows short sellers have lost $120 billion from this year’s rally as the S&P 500 climbed to a 14-week high.
Short sellers have incurred roughly $120 billion in mark-to-market losses this year, including $72 billion in the first half of June, according to the firm.
The analyst also states that short interest in the U.S. market topped $1 trillion this month, hitting the highest level since April 2022.
“There are still many investors and hedge funds who think that this rally is ready for a pullback,” said Ihor Dusaniwsky, managing director of predictive analytics at S3.
“Or at least that several of the highflying stocks will lose steam and revert back to the mean.”
Hedge funds that are adding leverage after coming into the year positioned defensively have also increased their short positions; in other words, there’s strong indication of overleveraging.
“Hedge funds are increasing their market exposure, adding to both their long and short holdings, looking to play catch-up after missing some of the early year rally,” said Dusaniwsky.
Some of the highest short interest retail favorites include AMC Entertainment (NYSE:AMC) stock at 22.51%, Mullen Automotive (NASDAQ:MULN) at 21.68%, and GameStop (NYSE:GME) at 18.85%.
“Investors have been cautiously positioned really since last summer, in anticipation of this recession that has yet to materialize,” said Jason Draho, head of asset allocation Americas at UBS Global Wealth Management.
“The more the market goes up, the more I think those who are on the sidelines have to figure out how to get back in.”
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