Jefferies’ Top Crowded Semiconductor Short Positions: Top 10 Stocks

1. Wolfspeed, Inc. (NYSE:WOLF)

Number of Hedge Fund Holders In Q2 2024: 29

Shares Short % Of Outstanding: 30.74%

Wolfspeed, Inc. (NYSE:WOLF) is another ill-fated silicon carbide semiconductor manufacturer. Its woes are deeper than ON Semi though, since unlike the latter, the firm has not turned a profit in any of its four latest fiscal years. Consequently, investors just seem to be waiting to pounce on a sharp share price drop. Wolfspeed, Inc. (NYSE:WOLF)’s shares are down 64.36% year to date, which makes it one of the worst-performing semiconductor stocks on our list. Its products are used in a variety of applications, such as electric vehicles, solar systems, and radio frequency products production – all of which are dependent on a robust and cyclical economy. However, Wolfspeed, Inc. (NYSE:WOLF) is one of the few companies capable of producing 200mm silicon carbide wafers. These are large wafers that reduce the per-chip costs for buyers. Consequently, success in landing deals could help the firm, and a cool $750 million in CHIPS Act subsidies and another $750 million in capital from a consortium of investors could help the firm manage its negative cash flow problems. Yet, the CHIPS funding is contingent on milestones, so unless Wolfspeed, Inc. (NYSE:WOLF) delivers, it can struggle to generate tailwinds.

Chartwell Investment Partners mentioned Wolfspeed, Inc. (NYSE:WOLF) in its Q1 2024 investor letter. Here is what the fund said:

“Wolfspeed was under pressure, as weak sales of electric vehicles (EVs) from automakers led to lower demand levels for the company’s specialized silicon carbide (SIC) chips widely used in EVs. These lower demand trends started in the second half of last year and continued through the first quarter.”

WOLF is a semiconductor stock that institutional investors are shorting according to Jefferies. While we acknowledge the potential of WOLF as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than WOLF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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