In this article, we discuss the 5 most shorted stocks hedge funds are buying. If you want to read our detailed analysis of these stocks, go directly to the 10 Most Shorted Stocks Hedge Funds Are Buying.
5. Arch Resources, Inc. (NYSE:ARCH)
Number of Hedge Fund Holders: 28
Float Shorted: 26.09%
Arch Resources, Inc. (NYSE:ARCH) produces and sells coal. Amid a clean energy drive spearheaded by US President Biden, the stock has suffered and a recent Bloomberg report indicates that coal stockpiles at power plants across the country are at historic lows. This comes even as miners reduce production and more coal is burned at plants due to the increase in natural gas prices over the past few months. The company missed market expectations on earnings per share by $1.02 in the third quarter.
Despite the bleak outlook, analysts are largely constructive on Arch Resources, Inc. (NYSE:ARCH). Earlier this month, B Riley raised the price target on the stock to $120 from $87, keeping a Buy rating.
At the end of the second quarter of 2021, 28 hedge funds in the database of Insider Monkey held stakes worth $276 million in Arch Resources, Inc. (NYSE:ARCH), up from 25 in the previous quarter worth $162 million.
4. Confluent, Inc. (NASDAQ:CFLT)
Number of Hedge Fund Holders: 30
Float Shorted: 23.96%
Confluent, Inc. (NASDAQ:CFLT) operates in the cloud software industry. In the second quarter, the company posted earnings per share of -$0.31, beating estimates by $0.08. The revenue over the period was $88 million, up 64% year-on-year and beating predictions by over $11 million. The company debuted on the stock market in June and the stock soared by more than 30% on the second day of trading, pushing the valuation of the company beyond $11 billion.
Deutsche Bank analyst Patrick Colville had raised the price target on Confluent, Inc. (NASDAQ:CFLT) stock to $42 from $37 in August but maintained a Hold rating following a “solid” second quarter earnings report.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based firm Lone Pine Capital is a leading shareholder in Confluent, Inc. (NASDAQ:CFLT) with 3.6 million shares worth more than $172 million.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Confluent, Inc. (NASDAQ:CFLT) was one of them. Here is what the fund said:
“The new issue market remains an attractive source of new ideas and we participated in four IPOs in the latest period. Confluent sells and distributes a commercialized version of open source software called Kafka created by former executives at LinkedIn. The solution allows enterprise users the ability to capture data in real time as it is streaming. A prime use case is capturing real-time inventory across retail stores and distribution centers to enable omni-channel commerce. We believe it is early days in the company’s commercialization of this technology which can capture data in both on-premise and hybrid cloud environments. Global-e Online, meanwhile, removes many of the frictions around cross-border ecommerce by handling the different tax structures, languages, currencies, local logistics and fulfillment/returns for any size retailer. The company’s initial customers have been mostly mid to higher end retailers but an investment by Shopify should enable Global-e to significantly increase merchant reach.”
3. Katapult Holdings, Inc. (NASDAQ:KPLT)
Number of Hedge Fund Holders: 33
Float Shorted: 7.70%
Katapult Holdings, Inc. (NASDAQ:KPLT) has slumped in value by over 63% year-to-date, largely because of weak fundamentals. The company failed to impress analysts in the second quarter earnings, reporting a net loss of $8 million over the period compared to a net income of $5 million recorded between March and June last year. The company also removed explicit guidance for the fiscal year citing uncertainty in consumer spending behaviors.
Cantor Fitzgerald analyst Josh Siegler initiated coverage of Katapult Holdings, Inc. (NASDAQ:KPLT) stock with a Neutral rating and $6 price target earlier this month, noting some near-term headwinds for the firm.
At the end of the second quarter of 2021, 33 hedge funds in the database of Insider Monkey held stakes worth $283 million in Katapult Holdings, Inc. (NASDAQ:KPLT).
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.”
1. ZoomInfo Technologies Inc. (NASDAQ:ZI)
Number of Hedge Fund Holders: 35
Float Shorted: 26.82%
ZoomInfo Technologies Inc. (NASDAQ:ZI) stock plunged in value by over 6% in late September after one of the directors of the company sold stock worth $74 million in the company. The company has also recently announced a secondary stock offering worth $20 million. The firm operates a cloud-based market intelligence platform.
Barclays analyst Raimo Lenschow upgraded ZoomInfo Technologies Inc. (NASDAQ:ZI) stock to Overweight from Equal Weight with a price target of $83, highlighting that the firm seemed attractively valued given the move to 2023 estimates.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in ZoomInfo Technologies Inc. (NASDAQ:ZI) with 2.6 million shares worth more than $136 million.
You can also take a peek at 10 Companies that Benefit From Crypto Mining and 12 Best Artificial Intelligence Stocks To Invest In Right Now.
