GS isn't buying WAG for a short term trade. Their thesis on WAG will take time to play out. The shorts are looking for a quick pop. GS is playing a long term trend in healthcare. If Obamacare goes into effect, WAG is very well positioned with neighborhood clinics available to serve a larger insured base.
To date, the clinics have not been very profitable for WAG, but they are an investment for the future. Doctors will be forced into hospital practices. They will not be available to handle non-urgent care in a convenient way. The opportunity for WAG could be enormous for treatment of chronic disease processes and routine care.
Short term, WAG must manage through a changing environment for healthcare and a weak economy (getting weaker over the next year). Speculators who are long, or short, will likely be disappointed. Long term investors who understand what GS sees going on at WAG will do very well.
I wouldn't be surprised to see Buffett start to accumulate a large position, as well.