5 Most Shorted Stocks Hedge Funds Are Buying

2. Wayfair Inc. (NYSE:W)

Number of Hedge Fund Holders: 35

Float Shorted: 24.07%    

Wayfair Inc. (NYSE:W) stock is down 12% over the last month as a regulatory crackdown in China affects the business of the company. Jefferies recently downgraded the stock to Hold from Buy with a price target of $225, near the 52-week low price of $221. The investment advisory cited China risk, demand worries, and rising costs as some of the reasons behind the downgrade. 

Morgan Stanley has also downgraded Wayfair Inc. (NYSE:W) to Underweight from Equal Weight and slashed the price target on the stock to $195 from $290, underlining that new sales estimates and trading multiples of the firm were not impressive.  

Among the hedge funds being tracked by Insider Monkey, New York-based firm Spruce House Investment Management is a leading shareholder in Wayfair Inc. (NYSE:W) with 4.8 million shares worth more than $1.5 billion. 

In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Wayfair Inc. (NYSE:W) was one of them. Here is what the fund said:

“During the quarter, Wayfair Inc. was a material contributor to the portfolio after reporting strong earnings, increased revenue, positive operating margins, and strong free cash flow generation. The company’s long-term trajectory is positive, and we are pleased to own this business.”