Currently, while the market may be experiencing a bull run, there remains considerable volatility. As of 2024, short sellers have secured unprecedented profits, even from prominent players like Nvidia (NASDAQ: NVDA) and Tesla (NASDAQ: TSLA), as highlighted by a record-breaking weekly profit reported in late April.
Nevertheless, with stock market valuations reaching all-time highs (ATH) and ongoing significant macroeconomic concerns, short sellers remain undeterred by the bull market.
For those aiming to take advantage of bearish strategies and potential market pullbacks, Finbold has assembled a list of the three most-shorted stocks in the S&P 500.
Super Micro Computer (NASDAQ: SMCI)
Specializing in high-performance and efficient server manufacturing, Super Micro Computer (NASDAQ: SMCI) was, and may still be, well-positioned to gain significantly from AI’s swift growth. However, on August 27, the short-selling activist group Hindenburg Research published a report accusing the company of accounting irregularities and evading sanctions.
At that point, SMCI shares were priced at $54.76, but by the end of the next trading day, this value had plummeted to $44.35, marking a 19.01% decline. Although this reaction was not as catastrophic as some of Hindenburg’s previous reports, as of the latest update, SMCI stock has not recovered, trading at approximately $47.45.
Despite this downturn, year-to-date (YTD) returns have only slightly dipped to 66.21%, and short sellers are clearly sensing opportunity, with 20.15% of the stock’s float currently shorted.
Still, Wall Street analysts remain optimistic. Following a 10-for-1 stock split, the average price target for SMCI stock is set at $69.13, indicating a potential upside of 45.9%.
MicroStrategy Inc (NASDAQ: MSTR)
As the largest corporate owner of Bitcoin (BTC), MicroStrategy has so far outperformed the S&P 500. However, given its strong correlation with the cryptocurrency, many traders have taken short positions, anticipating a possible BTC downturn.
Currently, 16.83% of MSTR’s float has been shorted. Although founder and CEO Michael Saylor has expressed ambitious plans for MSTR to evolve into the first Bitcoin bank, technical analysts have noted concerning bearish divergences that could indicate a short-term correction.
As of this writing, MSTR shares are priced at $242.70, leading to a total YTD return of 254.23%. It seems that bullish sentiment prevails, but any substantial correction could offer short sellers a chance for significant gains.
International Paper (NYSE: IP)
While short sellers may be primarily targeting technology and semiconductor companies due to their significant recent gains, any firm that exhibits signs of weakness is also a target.
International Paper (NYSE: IP), the world’s largest pulp and paper producer, has shown unexpected strength in 2024. As of now, IP stock is valued at $48.76, reflecting a YTD increase of 33.44%, although it has remained within a narrow trading range for the last month.
In light of difficulties in maintaining profitability, the company has announced plans to close four facilities, resulting in over 650 job losses.
While consensus estimates predict a slight revenue increase alongside a significant drop in earnings per share (EPS), short sellers appear confident that IP shares will lose a substantial portion of their 2024 gains, with 12.52% of the stock’s float currently shorted.
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