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10 Most Shorted Stocks Right Now

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·11 min read
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In this article, we discuss the 10 most shorted stocks right now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Most Shorted Stocks Right Now.

The beginning of 2021 had pitted retail investors against hedge funds in a short squeeze saga involving video game firm GameStop and theater chain AMC Entertainment. Hedge funds suffered billions in losses through this episode, spurring retail investors who aimed to replicate this “success” by initiating more short squeezes through the year. As a result, interest in stocks with high short interest climbed to astronomically high proportions. Reddit forums where retail investors exchanged investment ideas gained millions of followers overnight.

Even though hedge funds had come out second-best in this battle for market domination, they were able to recoup some of these losses almost immediately. News publication Bloomberg has recently reported that the United States Department of Justice has opened an investigation into investment firms engaged in short selling as part of a larger probe into trading abuses. Two of the prominent names cited in the inquiry are Citrus Research and Melvin Capital. Both were heavily involved in the short squeeze saga of 2021.

Despite the inquiry, interest in shorted stocks remains high as retail investors look for the next GameStop. Some of the most-shorted stocks right now include Blink Charging Co. (NASDAQ:BLNK), Gogo Inc. (NASDAQ:GOGO), and Cassava Sciences, Inc. (NASDAQ:SAVA), among others discussed in detail below.

Our Methodology

These were picked keeping in mind the float shorted. The analyst ratings and business fundamentals of each stock are also discussed to provide readers with some additional context for their investment choices.

Data from around 900 elite hedge funds tracked by Insider Monkey was used to identify the number of hedge funds that hold stakes in each company.

Luis Louro / shutterstock.com

Most Shorted Stocks Right Now

10. Nikola Corporation (NASDAQ:NKLA)

Number of Hedge Fund Holders: 12

Float Shorted: 30.02%

Nikola Corporation (NASDAQ:NKLA) develops energy and transportation solutions. Supply chain problems have hit the company hard in the past few months, with reports indicating that the executives who managed the supply chain department at Nikola Corporation (NASDAQ:NKLA) have left. However, the firm recently dismissed these reports and said the supply chain department had been “intentionally strengthened”.

Some hedge funds back Nikola Corporation (NASDAQ:NKLA) as it aims to emerge stronger from the supply chain issues. Among the hedge funds being tracked by Insider Monkey, San Francisco-based firm Inclusive Capital is a leading shareholder in Nikola Corporation (NASDAQ:NKLA) with 10 million shares worth more than $185 million.

Just like Blink Charging Co. (NASDAQ:BLNK), Gogo Inc. (NASDAQ:GOGO), and Cassava Sciences, Inc. (NASDAQ:SAVA), Nikola Corporation (NASDAQ:NKLA) is one of the stocks feeling the pressure of an economic slowdown.

In its Q4 2020 investor letter, Bireme Capital, an asset management firm, highlighted a few stocks and Nikola Corporation (NASDAQ:NKLA) was one of them. Here is what the fund said:

“Nikola Corporation (NKLA) is a poor-man’s facsimile of Tesla. Even the name is a blatant ripo: both are named aer the inventor Nikola Tesla. NKLA is a pre-revenue company founded in 2014 that has yet to bring a product to market, despite the promotion of a dizzying array of concepts:

Nikola Badger: pickup with both fuel-cell and electric variants

Nikola One: fuel-cell commercial semi-truck

Nikola Two: fuel-cell commercial semi-truck

Nikola Tre: electric commercial semi-truck

Nikola NZT: electric four-wheel drive utility vehicle

Nikola Reckless: electric military grade o-highway vehicle

Nikola WAV: electric watersports vehicle

As far as we can tell from their latest investor communications, only the Nikola Tre Commercial semitruck is still in development.

As far as we can tell from their latest investor communications, only the Nikola Tre Commercial semitruck is still in development. NKLA’s history is full of deception and vaporware. They showed a video of the Nikola One in motion; they later admitted that it didn’t work and was just rolling down a hill. NKA’s founder Trevor Milton resigned in disgrace aer Hindenburg Research published a report calling NKLA an “intricate fraud.” NKLA is currently under investigation by both the SEC and DoJ. Partnerships with GM, Republic Services and BP have been canceled. Nevertheless, the company sports an $8b market cap, because “electric vehicles.” Though pretenders are particularly ubiquitous in the bubbly EV industry, pretenders are to be found in many other industries as well.”

9. Bed Bath & Beyond Inc. (NASDAQ:BBBY)

Number of Hedge Fund Holders: 17

Float Shorted: 30.90%

Bed Bath & Beyond Inc. (NASDAQ:BBBY) owns and runs a chain of retail stores. Hedge funds have been dumping the stock in recent months. At the end of the third quarter of 2021, 17 hedge funds in the database of Insider Monkey held stakes worth $122 million in Bed Bath & Beyond Inc. (NASDAQ:BBBY), compared to 21 in the previous quarter worth $363 million.

On January 7, Loop Capital analyst Anthony Chukumba maintained a Sell rating on Bed Bath & Beyond Inc. (NASDAQ:BBBY) stock and lowered the price target to $10 from $14, noting that the earnings troubles of the firm reflected a loss in market leadership and customer relevance.

In its Q2 2021 investor letter, Heartland Advisors, an asset management firm, highlighted a few stocks and Bed Bath & Beyond Inc. (NASDAQ:BBBY) was one of them. Here is what the fund said:

“The gyrations of story stocks touted on message boards have resulted in distortions in the market but on rare occasions have also swept up a few compelling opportunities. Bed Bath & Beyond (BBBY), a national retailer of home goods, babywear and health and beauty products, is one example.

Even before Bed Bath & Beyond made headlines earlier this year when day traders drove the price of shares up in an effort to squeeze short sellers, the company had caught our attention for the results its new management team was delivering since taking over in late 2019.

CEO Mark Tritton, who came to Bed Bath & Beyond Inc. (NASDAQ:BBBY) after a successful tenure at Target, quickly got to work installing new corporate leadership, closing underperforming stores, selling non-core businesses to firm up the balance sheet, and implementing retail best practices across the company. He also worked to improve store efficiency and revamped the company’s online presence.

The moves by Tritton made an impact. In its 2020 fiscal year, BBBY closed 144 under-performing stores, grew new digital customers by 95%, reduced debt by $1 billion, and returned $375 million of capital to shareholders. Despite the meaningful improvements, and the strong performance year-to-date, shares of the retailer are trading at just .35X sales and less than 5X estimated 2022 earnings before interest, taxes, depreciation, and amortization—roughly half of the multiple commanded by peer Williams- Sonoma Inc.

At current valuations, we view Bed Bath & Beyond Inc. (NASDAQ:BBBY) as offering attractive upside as recent improvements gain traction. It appears we’re not alone as executives have also been buying shares in recent months.”

8. SmileDirectClub, Inc. (NASDAQ:SDC)

Number of Hedge Fund Holders: 18

Float Shorted: 33.23%

SmileDirectClub, Inc. (NASDAQ:SDC) operates as an oral care firm. The company recently announced cost reduction plans aimed at improving profitability that include a pause on efforts to expand in international markets. The firm has suspended operations in countries like Mexico, Spain, Germany, and the Netherlands. The reduction in workforce as a result will save the company $120 million in 2022.

Hedge funds have been selling SmileDirectClub, Inc. (NASDAQ:SDC) stock in the past few months. At the end of the third quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $58 million in SmileDirectClub, Inc. (NASDAQ:SDC), compared to 19 in the preceding quarter worth $135 million.

7. Beyond Meat, Inc. (NASDAQ:BYND)

Number of Hedge Fund Holders: 16

Float Shorted: 33.99%

Beyond Meat, Inc. (NASDAQ:BYND) makes and sells plant-based meat products. Some top hedge funds hold large stakes in the firm. Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Beyond Meat, Inc. (NASDAQ:BYND) with 1.5 million shares worth more than $167 million.

Beyond Meat, Inc. (NASDAQ:BYND) stock has nose-dived in recent weeks as investors pull away from unprofitable stocks amid rising interest rates. In late January, the shares lost 9% of their value in a single day of trading to climb further closer to the 52-week low of $53.10.

In its Q2 2021 investor letter, Baillie Gifford, an asset management firm, highlighted a few stocks and Beyond Meat, Inc. (NASDAQ:BYND) was one of them. Here is what the fund said:

“One of the most important cognitive elements is our recognition that consumer patterns and attitudes are evolving increasingly rapidly and with ever greater amplitude. While the human needs for self-actualisation, esteem and belonging are innate and immutable, they are being expressed in new ways. Tastes are being shaped by social groups who are culturally similar but geographically distant. The lines between the physical and digital-self continue to blur.

To those in the throes of middle age, this can be discombobulating. I profess to unease when my daughter recently earned five pounds stacking logs – only to ‘blow’ this pocket money on a pair of virtual Gucci sneakers for her online Roblox character. But we need to be imaginative about the possible size of the market for virtual luxury in the long term and it’s encouraging to observe that Kering is already on the front foot. It is also amply clear that the experienced Long Term Global Growth investors who predate Generations Y & Z, need the help of colleagues in understanding the mood and aspirations of a new cohort of conscious consumers. In this sense, the multigenerational and multicultural dynamic within the LTGG team (and indeed across the broader Baillie Gifford investment floor), has never seemed more important.

It was the younger members of the team who pushed us to be more imaginative on the true size of the opportunity for Beyond Meat, Inc. (NASDAQ:BYND). This holding’s investment case is predicated firmly on the removal of the cow as a rather inefficient middle-man between the sun and the stomach. Some within the team see no reason why the opportunity for Beyond Meat, Inc. (NASDAQ:BYND) shouldn’t ultimately be larger than the $500bn market for traditional protein forms.”

6. Lemonade, Inc. (NYSE:LMND)

Number of Hedge Fund Holders: 16

Float Shorted: 34.59%

Lemonade, Inc. (NYSE:LMND) provides insurance products. Barclays analyst Tracy Benguigui recently kept an Equal Weight rating on the stock and lowered the price target to $43 from $62, underlining that the property and casualty pricing cycle was past a peak with “reserves and inflation in focus”.

Lemonade, Inc. (NYSE:LMND) has witnessed a flurry of hedge fund activity in recent months. At the end of the third quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $117 million in Lemonade, Inc. (NYSE:LMND), up from 15 in the preceding quarter worth $182 million.

In addition to Blink Charging Co. (NASDAQ:BLNK), Gogo Inc. (NASDAQ:GOGO), and Cassava Sciences, Inc. (NASDAQ:SAVA), Lemonade, Inc. (NYSE:LMND) is one of the stocks feeling the heat of rising inflation.

In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Lemonade, Inc. (NYSE:LMND) was one of them. Here is what the fund said:

“We also exited our investment in Lemonade. Lemonade is a digital-first insurance provider, offering both domestic and international homeowners and renters insurance. The company is disrupting its industry, having digitized the entire insurance experience—from client onboarding to claims—in order to build generational relationships with first-time insurance buyers. Using its app, the median time to receive a bindable renters insurance quote from Lemonade is less than two minutes, and the time for a homeowner’s quote is under three minutes. All claims are also filed through the Lemonade app, where a claims-specific bot can pay out applicable claims in as little as three seconds. The company’s longterm strategy is built upon acquiring customers cheaply today as they begin their adult life with the anticipation of growing future premiums as customer demands for insurance products naturally increase as they accumulate typically insured possessions—home and car purchases, travel, pets and providing coverage for beneficiaries in the event of an unforeseen death. We believe the addressable market is massive, particularly given the industry has largely resisted change, giving Lemonade, Inc. (NYSE:LMND) a long runway to take share from weaker legacy competitors. That said, with shares appreciating above our PMV estimate, we exited our campaign.”

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Disclosure. None. 10 Most Shorted Stocks Right Now is originally published on Insider Monkey.