Most Shorted Major Stocks of February 2019
As the stock market as a whole continues to extend its sharp rally from the late December lows, we bring you the February 2019 edition of our monthly Most Shorted Major Stocks. This time around, we’ve included all U.S. stocks that are mid-cap and above in market capitalization. (See also last month’s edition: Most Shorted Major Stocks of January 2019.)
Short Sellers on the Prowl
It may seem to some that the current rally in stocks will keep going until we break last year’s all-time highs and beyond. Other investors are not nearly so bullish. Traders and investors who have a bearish bias will look to short stocks. This just means that the trader expects (or hopes) that a stock will go down in price. As a result, he/she will borrows shares (typically from a broker) and immediately sell them with the objective of buying them back later at a lower price for a profit.
The Short Squeeze
One thing that should be noted with any heavily-shorted stock is the potential for what’s called a “short squeeze.” With any stock that sees a lot of short activity, short sellers can sometimes get trapped. This means that any significant and unexpected rise in the stock can result in traders having to cover their short positions in order to avoid losing too severely. This can result in additional and substantial upward pressure on the stock. When there is a short squeeze like this, stocks can and will often rally sharply.
Most Shorted Major Stocks of February 2019
Some of the most shorted stocks on our list, especially Match Group and Restoration Hardware, have done quite well. Both have rallied double digits year to date. Even though a stock may be heavily shorted, doesn’t necessarily mean it’s going to tank. Sometimes, it’s just the opposite.
Below is our list of the most shorted stocks for February in descending order of short interest percentage. This percentage is simply the number of shorted shares divided by the total number of shares outstanding. Also included are each stock’s current price and performance year to date (as of the market close on 2/15/2019).
- Carvana (CVNA) – Current Price (as of 2/15/2019 market close): $35.35 | Short Interest: 54.97% | Year-to-Date Performance (as of 2/15/2019 market close): +8.07%
- Akcea Therapeutics (AKCA) – Current Price (as of 2/15/2019 market close): $27.69 | Short Interest: 47.52% | Year-to-Date Performance (as of 2/15/2019 market close): -8.13%
- Ligand Pharmaceuticals (LGND) – Current Price (as of 2/15/2019 market close): $120.86 | Short Interest: 38.35% | Year-to-Date Performance (as of 2/15/2019 market close): -10.94%
- Restoration Hardware (RH) – Current Price (as of 2/15/2019 market close): $145.05 | Short Interest: 38.00% | Year-to-Date Performance (as of 2/15/2019 market close): +21.06%
- Match Group (MTCH) – Current Price (as of 2/15/2019 market close): $57.33 | Short Interest: 37.61% | Year-to-Date Performance (as of 2/15/2019 market close): +34.04%
One of the most notoriously shorted stocks – Tesla (TSLA) – clearly does not make an appearance on this month’s list. That’s because it currently falls significantly lower than our featured stocks in terms of short interest – only 20.40%. But that’s still a lot of short selling.
One standout on the list is clearly Match Group (owner of Match.com and Tinder). This company also featured on our list for last month (January 2019). And back then, just like this month, it was also the highest performer in the group, by far. Sometimes, short sellers get it wrong – very wrong.
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Past performance is not indicative of future results. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Senior Market Analyst at The Technicals
A veteran global macro trader/analyst, Bart focuses on major market moves in currencies, commodities, fixed income, and global equity indexes. Bart stresses inter-market correlations and dynamics while keeping a close eye on risk. He has published countless market analysis pieces and has been a guest expert for a variety of major financial media. Contact Bart