In this article, we will be taking a look at the 10 most shorted stocks in 2022. To skip our detailed analysis of these stocks and the strategy of shorting a stock, you can go directly to see the 5 Most Shorted Stocks in 2022.
This September, Apple Inc. (NASDAQ:AAPL) overtook Tesla, Inc. (NASDAQ:TSLA) as the most shorted stock in the US market. According to the Wall Street Journal, traders across the country accumulated bearish bets worth about $18.4 billion tied to Apple Inc. (NASDAQ:AAPL). Tesla, Inc. (NASDAQ:TSLA) had held on to the title of the most shorted American stock for over two years, with its current short interest standing at about $17.4 billion. The iPhone maker became the most shorted stock with $18.4 billion short interest.
Short selling has long been a favorite investing strategy for many investors. Traders with opposing outlooks on various stocks have continued utilizing this strategy on a range of stocks, with the most notable example in recent history being that of the “meme stock” GameStop Corp. (NYSE:GME). In January 2021, a short squeeze of the video game retailer resulted in magnanimous financial losses for hedge funds and short sellers alike. About 140% of the company’s public float was sold short, resulting in a scarcity of the company’s shares that drove up its price. Initiated by Reddit users from the subreddit r/wallstreetbets, the short squeeze of GameStop Corp. (NYSE:GME) became an investment legend in no time.
Shorting stocks can result in exceptional gains for investors, as past examples show. According to a Bloomberg report, the ProShares Short S&P 500 ETF brought in huge amounts of profits between 2020 and August 2022 because of its short-selling strategy. The ETF, worth over $3 billion, focuses on betting against the S&P 500. Traders added about $154.4 million to the ETF as of the end of August, making this the largest one-day increase for the ETF since April 2020. Two ETFs from ProShares, focusing on placing bearish bets on tech stocks, managed to bring in net positive inflows in trading sessions this August.
Photo by Adam Nowakowski on Unsplash
Let’s now take a look at the 10 most shorted stocks in 2022.
Our Methodology
We picked the most shorted stocks in 2022 based on factors such as the percentage of each company’s total float being shorted, their short interest value and percentage, among more. We have ranked these stocks based on the number of hedge funds holding stakes in them, from the lowest to the highest.
Most Shorted Stocks in 2022
10. Revlon, Inc. (NYSE:REV)
Number of Hedge Fund Holders: 14
Revlon, Inc. (NYSE:REV) is a consumer staples company working to develop beauty and personal care products for sale across the globe. The company is based in New York, United States. Some of its most notable brands include Revlon ColorSilk and Revlon Professional.
As of June 2022, Revlon, Inc. (NYSE:REV) was one of the most shorted American stocks. About 73.3% of the company’s total float had been shorted by then. The company’s year-over-year revenue growth currently stands at 0.6%.
There were 14 hedge funds holding stakes in Revlon, Inc. (NYSE:REV) in the second quarter, with a total stake value of $65.3 million. Covalent Capital Partners was the largest stakeholder in the company, holding 316,600 shares worth $1.7 million.
Investment management company Mittleman Brothers Investment Management mentioned Revlon, Inc. (NYSE:REV) in its second quarter 2022 investor letter. Here’s what the firm said:
“Lastly, MIM has already communicated regarding the Revlon, Inc. (NYSE:REV) bankruptcy filing on June 15th, see this link if you missed it, as MIM’s opinion here is unchanged: Revlon Bankruptcy
Revlon has since traded up from the pre-bankruptcy filing low of $1.08 on 13 June to above $9.00 on a couple of occasions, on 22 June and again on 1 August, and during those two trading sessions, MIM sold a good portion of its position at just over $9.00/share, given Chris’ reduced estimate of fair value is $10 (down from the mid-20s). If the bankruptcy process results in an auction of the assets the realisation could be far in excess of $10 per share by simply applying the range of current market multiples. But, bankruptcy introduces significant costs, uncertainties, and risks that could confound fairness, so reducing the weighting into these periodic price spikes makes sense.
MIM continues to think there are plenty of buyers for these assets who could easily pay the 2x sales and 14x EBITDA needed (by Chris’ math) for the equity to recover about $10 per share in value. 15x EBITDA would be nearly $16 per share. 16x would be $22. And there are some new unexpected potential buyers, too…” (Click here to read more)
Revlon, Inc. (NYSE:REV), like Apple Inc. (NASDAQ:AAPL), Tesla, Inc. (NASDAQ:TSLA), and GameStop Corp. (NYSE:GME), was one of the top shorted stocks in the US this year.
9. Bed Bath & Beyond Inc. (NASDAQ:BBBY)
Number of Hedge Fund Holders: 14
Bed Bath & Beyond Inc. (NASDAQ:BBBY) is a retail store operator, working through its subsidiaries to manage a chain of retail stores. The company sells domestic merchandise such as bed linens, bath items, and kitchen textiles, among more. It also provides home furnishings, consumables, and a range of juvenile products.
On September 1, a Market Perform rating was reiterated on Bed Bath & Beyond Inc. (NASDAQ:BBBY) shares by analyst Bobby Griffin at Raymond James.
As of this August, Bed Bath & Beyond Inc. (NASDAQ:BBBY) was among the US stocks holding the highest short interest. The stock moved up by 42% on August 16, and had a short interest of 47.2%.
Bed Bath & Beyond Inc. (NASDAQ:BBBY) had 14 hedge funds long its stock in the second quarter, with a total stake value of $23.1 million. In comparison, 15 hedge funds were long the stock in the previous quarter, with a total stake value of $69.3 million.
8. CompoSecure Inc. (NASDAQ:CMPO)
Number of Hedge Fund Holders: 14
CompoSecure Inc. (NASDAQ:CMPO) is an information technology company focusing on the manufacturing of metal, plastic, composite ID, and proprietary financial transaction cards in the US and internationally. The company is based in Somerset, New Jersey. Its metal form factors primarily include embedded, metal veneer lite, metal veneer, and full metal products.
As of this September, CompoSecure Inc. (NASDAQ:CMPO) had a short interest of 91.7%. The company’s shares’ short value was $8.4 million. Its revenue growth year over year currently stands at 32.3%, and it has an operating cash flow growth of 50.9% year over year.
CompoSecure Inc. (NASDAQ:CMPO) was found among the 13F holdings of 14 hedge funds in the second quarter, with a total stake value of $20.2 million. Of these funds, LMR Partners was the largest stakeholder in the company, holding $1.2 million shares worth about $6.5 million.
7. GameStop Corp. (NYSE:GME)
Number of Hedge Fund Holders: 17
GameStop Corp. (NYSE:GME) is a computer and electronics retail company. It offers games and entertainment products through its e-commerce properties and stores. The company operates primarily in the US, Canada, Australia, and Europe.
This September, after GameStop Corp. (NYSE:GME) announced a new partnership with FTX, the stock jumped by 11.06%. The new partnership may help increase buyers for GameStop Corp. (NYSE:GME) products, since the company is going to begin carrying FTX gift cards in select stores from now on. Its revenue growth year over year currently stands at 8.5%, and its short volume stands at over 49 million shares.
Our hedge fund data shows 17 hedge funds long GameStop Corp. (NYSE:GME) in the second quarter, and 18 hedge funds long the stock in the previous quarter. Their total stake values were $64.5 million and $265.6 million, respectively.
Investment management company Bireme Capital mentioned GameStop Corp. (NYSE:GME) in its second quarter 2022 investor letter. Here’s what it said:
“Amazingly, GameStop Corp. (NYSE:GME) is one of our only short positions to not fall in 2022. The stock trades at an $11.5b market cap, exceeding its pre-pandemic peak by billions of dollars. This is despite the fact that revenue is down 30% from the peak, gross margins are down 1500 bps, and the company has generated a negative free cash outflow of $700m in the last four quarters (we had to double check that number because it is so high).
Wall Street has consistently revised downward their estimates of Gamestop’s profitability, making its stock price stability in 2022 even more perplexing. Analysts currently estimate an EBITDA loss of around $400m, markedly worse than their estimates as of 2/3/22 of a loss of $60m. Their recently launched NFT marketplace will do nothing to fix their core business and comes about a year too late to be relevant in the NFT space. Instead, we see this as another example of a meme stock company hoping it can ape its way into a new business model, utilizing the popularity of the stock to drive new lines of business. We are not optimistic, and think the $11.5b market cap drastically overestimates the capability of Gamestop to pivot into something more profitable. We find it unlikely that Gamestop books a GAAP profit ever again.”
6. EVgo Inc. (NASDAQ:EVGO)
Number of Hedge Fund Holders: 18
EVgo Inc. (NASDAQ:EVGO) is an automotive retail company, operating a network of direct current fast charging in the US. The company provides electricity directly to drivers of electric vehicles, who can access its networked chargers and original equipment manufacturer charging and related services across the country. It is based in Los Angeles, California.
David Kelley at Jefferies initiated coverage of EVgo Inc. (NASDAQ:EVGO) shares on July 7, placing a Hold rating on the stock. The analyst also placed a $5.5 price target on the shares.
EVgo Inc. (NASDAQ:EVGO) was among the most shorted American stocks this August, having a short interest of 34.9%. The company’s revenue growth year over year is 80.3%. Its revenue in the second quarter of 2022 was $9.08 million, beating the previous quarter’s revenue of $7.7 million.
LMR Partners was the largest stakeholder in EVgo Inc. (NASDAQ:EVGO) in the second quarter, out of a total of 18 hedge funds long the stock. The fund held 1.2 million shares worth $7.1 million, out of the total stake value of $15.7 million.
EVgo Inc. (NASDAQ:EVGO), like Apple Inc. (NASDAQ:AAPL), Tesla, Inc. (NASDAQ:TSLA), and GameStop Corp. (NYSE:GME), is a profitable short position many hedge funds are interested in today.
Click to continue reading and see the 5 Most Shorted Stocks in 2022.
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Disclosure: None. 10 Most Shorted Stocks in 2022 is originally published on Insider Monkey.
