In this article, we discuss 5 most shorted stocks in the world. If you want to see more stocks on this list, click 10 Most Shorted Stocks in the World.
5. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 106
Shares Shorted as of August 30: 53.59 million
Alibaba Group Holding Limited (NYSE:BABA), the Chinese e-commerce giant, is one of the most shorted stocks in the world. Several Chinese companies, including Alibaba Group Holding Limited (NYSE:BABA), had been added to the list of firms at risk of a delisting in the US on the back of the Holding Foreign Companies Accountable Act. Alibaba Group Holding Limited (NYSE:BABA) is also being audited by US officials.
On August 8, Deutsche Bank analyst Leo Chiang raised the price target on Alibaba Group Holding Limited (NYSE:BABA) to $160 from $155 and maintained a Buy rating on the shares. The company’s June quarter net income was above consensus while adjusted net margins also beat estimates, primarily due to a quicker than anticipated narrowing of losses in new initiatives, the analyst told investors. The analyst sees the present valuation as “defensive” and said a faster than expected macro rebound could offer upside potential.
Among the hedge funds tracked by Insider Monkey, 106 funds reported owning stakes worth $7.4 billion in Alibaba Group Holding Limited (NYSE:BABA) at the end of Q2 2022, up from 100 funds in the prior quarter worth $5.70 billion. Ken Fisher’s Fisher Asset Management is the biggest stakeholder of the company, with 14.5 million shares worth $1.6 billion.
Here is what Baron Funds specifically said about Alibaba Group Holding Limited (NYSE:BABA) in its Q2 2022 investor letter:
“Alibaba Group Holding Limited (NYSE:BABA) is the largest retailer and e-commerce company in China. Alibaba operates shopping platforms Taobao and Tmall and owns 33% of Ant Group, which operates Alipay, China’s largest third party online payment provider. Shares of Alibaba rose during the quarter, driven by an increasing focus on improving capital allocation, an improving regulatory environment, and government stimulus targeting Chinese consumers. We retain conviction that Alibaba will benefit from rapid growth in cloud services, logistics, and retail.”
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Shares Shorted as of August 30: 113.07 million
As of August 30, more than 113 million shares of Apple Inc. (NASDAQ:AAPL) have been shorted, making it a significant feature on our list of the most shorted stocks in the world. Apple Inc. (NASDAQ:AAPL) is facing extra pressure from the U.S. Senators as they have asked members of the intelligence community to examine if a deal between Apple Inc. (NASDAQ:AAPL) and the Chinese memory chip maker, Yangtze Memory Technologies, threatens national security.
On September 20, Evercore ISI analyst Amit Daryanani raised the price target on Apple Inc. (NASDAQ:AAPL) to $190 from $185 and kept an Outperform rating on the shares, citing larger demand for high-end iPhone models compared to earlier years. While he sees “modest unit upside” compared to low-single digit Street expectations, average selling prices “could surprise materially”, the analyst added.
According to Insider Monkey’s data, Apple Inc. (NASDAQ:AAPL) was part of 128 hedge fund portfolios at the end of June 2022, compared to 131 in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the biggest position holder in the company, with roughly 895 million shares worth $122.3 billion.
In its Q2 2022 investor letter, Alger Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple Inc. (NASDAQ:AAPL) is a leading technology provider in telecommunications. computing and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives extremely tight engagement with consumers and enterprises. The engagement is fostering the growing purchase of high-margin services like music, apps, and apple pay. Apple’s shares detracted from performance as management lowered its guidance for the second quarter due to headwinds from the war in Ukraine, adverse foreign currency shifts, and dampened consumer demand associated with the coronavirus in China. Additionally, many investors were concerned that lockdowns implemented to curtail the spread of COVID-19 would impact production of apple products, however the manufacturing facilities have resumed activity.”
3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 153
Shares Shorted as of August 30: 38.62 million
Alphabet Inc. (NASDAQ:GOOG), the parent company of Google and Google subsidiaries, is one of the most shorted stocks in the world. Alphabet Inc. (NASDAQ:GOOG) is navigating employee tensions, as CEO Sundar Pichai suggested earlier this month that he wanted Google to be 20% more productive, which might lead to product-line innovation and macro conditions might result in job cuts. As of August 30, over 38 million Alphabet Inc. (NASDAQ:GOOG) shares had been shorted.
Tigress Financial analyst Ivan Feinseth on August 3 raised the price target on Alphabet Inc. (NASDAQ:GOOG) to $186 from $183 and kept a Strong Buy rating on the shares, citing his view that the Q2 results attest to the strength of its core business in Cloud and Search. Moreover, continuous investment in Artificial Intelligence is driving “increasingly focused and helpful experiences for users and businesses,” the analyst added.
Among the hedge funds tracked by Insider Monkey, 153 funds were long Alphabet Inc. (NASDAQ:GOOG) at the end of the second quarter of 2022, compared to 160 funds in the prior quarter. Chris Hohn’s TCI Fund Management is the leading position holder in the company, with roughly 2.5 million shares worth $5.4 billion.
Here is what Madison Funds specifically said about Alphabet Inc. (NASDAQ:GOOG) in its Q2 2022 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) continues to perform well, but the price-to-earnings multiple contracted considerably due to concerns about the potential for revenue to be more economically sensitive than it has been historically given the vast size of the business today. Similarly, Adobe and Accenture continue to report strong sales growth, but performance has moderated a bit relative to the extremely robust results generated over the last year or so. In all three cases, we think that the longer-term outlook remains excellent.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 252
Shares Shorted as of August 30: 71.38 million
Amazon.com, Inc. (NASDAQ:AMZN) features on our list of the most shorted stocks in the world, given that more than 71 million shares have been shorted as of August 30. California Attorney General Rob Bonta on September 14 announced that his office had filed a lawsuit in San Francisco Superior Court against Amazon.com, Inc. (NASDAQ:AMZN), alleging that the firm’s contracts with third-party sellers and wholesalers resulted in “artificially high” prices, reduced competition, and violated the state’s antitrust and unfair competition laws. The lawsuit requires Amazon to stop these practices, hire a compliance team, and pay a violation fine.
On September 12, DA Davidson analyst Tom Forte reiterated his Buy rating and a $151 price target on Amazon.com, Inc. (NASDAQ:AMZN) after the company announced the purchase of warehouse automation firm, Cloostermans. With this purchase, paired with the iRobot acquisition, Amazon.com, Inc. (NASDAQ:AMZN) is making a “concerted effort” into the robotics and automation market, the analyst told investors.
According to insider Monkey’s data, 252 hedge funds were long Amazon.com, Inc. (NASDAQ:AMZN) at the end of Q2 2022, down from 271 funds in the last quarter. Jaime Sterne’s Skye Global Management is the biggest position holder in the company, with 15.4 million shares worth $1.6 billion.
Here is what RiverPark Funds specifically said about Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2022 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is a company that has been “reinventing normal” since its formation in 1994. In his 2015 shareholder letter, Jeff Bezos wrote that a dreamy business has at least four characteristics: “customers love it, it can grow to very large size, it has strong returns on capital, and it’s durable in time – with the potential to endure for decades.” Jeff’s advice was that “When you find one of these, don’t just swipe right, get married.” Unlike most mere mortal businesses that are lucky to have one such business, at the time, Amazon had three. Today, Amazon has five dreamy businesses under its one roof: AWS, Marketplace, Prime, Advertising and Logistics. Notably, each of these businesses were planted as tiny seeds and have grown mainly organically, quickly into meaningfully large businesses.7 And, given management’s belief that it is still “Day 1” of the internet, their focus on relentless innovation, and the tiny seeds they have recently planted, more dreamy businesses may soon follow.
In each of its current businesses, Amazon is the (or is one of the top two or three) dominant force in the world. For example, Amazon leads online retail with 41% market share, while the next ‘largest’ 11 companies each have single digit market share. AWS has 33% share in the cloud infrastructure market, exceeding the market share of its two largest competitors, Microsoft and Google, combined. 8 In Prime (launched in 2005), AMZN has well over 200 million subscribers,9 and with $31 billion of advertising revenue last year, AMZN is already the third largest advertising company (behind Google/YouTube and the Facebook family of apps). And finally, in its newest potential “dreamy” business logistics (encompassing both Fulfillment by Amazon and its recently launched “Buy with Amazon”), AMZN has the largest fulfillment and distribution capacity among U.S. retailers. Amazon has ~375 million square feet of total distribution capacity, dwarfing Walmart’s ~145 million square feet. Amazon is projected to surpass UPS in U.S. package volume in 2022, and in five years have a logistics network large enough that it won’t need to rely on UPS or the U.S. Postal Service.
In response to the pandemic, Amazon’s management team made the decision to interrupt its march towards higher margins and higher returns on capital to respond aggressively to its consumer’s demand explosion across its retail and its AWS infrastructure. This has resulted in lower operating margins within the income statement and much higher capital expenditures, reducing near-term free cash flow, but we believe, widening and deepening Amazon’s moats across all of its businesses. The fruits of these investments (increasing margins, expanding free cash flow and increasing ROIC) will ripen over the next few years, which will be one of the catalysts, we believe, that will drive the company’s stock materially higher…” (Click here to read the full text)
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
Shares Shorted as of August 30: 40.54 million
Microsoft Corporation (NASDAQ:MSFT) is another notable stock that is heavily shorted. Wells Fargo analyst Michael Turrin on September 22 wrote in a note to investors that he attended Microsoft Corporation (NASDAQ:MSFT)’s inaugural Power Platform Conference in Orlando, and although there weren’t any major new product announcements to call out, Microsoft Corporation (NASDAQ:MSFT) did introduce multiple new features across the platform. The company pointed out two core trends contributing to its focus on the space – the popularity of collaborative apps and the rise of the citizen developers, which Microsoft Corporation (NASDAQ:MSFT) is leaning into more aggressively. With Power Platform now exceeding $2 billion in scale and growing more than 70%, the analyst thinks it continues to be of strategic interest for Microsoft Corporation (NASDAQ:MSFT) in the short-term. The analyst has an Overweight rating and a price target of $350 on Microsoft Corporation (NASDAQ:MSFT) shares.
Among the hedge funds tracked by Insider Monkey, Microsoft Corporation (NASDAQ:MSFT) was part of 258 public stock portfolios at the end of June 2022, compared to 259 funds in the last quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is one of the leading stakeholders of Microsoft Corporation (NASDAQ:MSFT), with a position worth $4.6 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:
“Shares of Microsoft Corporation (NASDAQ:MSFT), a leading global provider of software solutions, declined 16.6% in the quarter along with the broader software group as well as due to growing concerns of a potential macro-driven slowdown. This is despite the company posting strong quarterly financial results and successfully absorbing headwinds from the war in Ukraine. The company had 21% revenue growth, 23% operating income growth, and 35% growth in Microsoft Cloud (all year-over-year in constant currency), which now represents 47% of total revenues. (read more…)”
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