According to a report by HazelTree, ExxonMobil Corp has surpassed Tesla as the most heavily shorted large-cap stock within the S&P 500. For the past four months, Elon Musk’s electric vehicle company was dominating the position of the most targeted stock by short sellers. Short selling is essentially a bet that a company’s stock price will decrease in value.
HazelTree employs a “Crowdedness Score” to assess the extent of short bets, ranging from one to 99. The highest score indicates that a significant portion of the funds tracked by HazelTree have short positions. This data covers more than 12,000 global equities and more than 700 funds.
In the large-cap category, ExxonMobil and Tesla took the top positions with scores of 99 and 97, respectively, followed by Apple (94), Charter Communications (91), Broadcom (91), Rivian Automotive (86), US Bank Corp (83), SNAP (83), Ford (78), and AirBnB (78).
The mid-cap sector’s three most-shorted companies were SOFI Technologies (99), American Airlines (92), and the electric vehicle manufacturer Lucid (92).
The report also shed light on the percentage of a stock’s supply that institutional investors were willing to lend to short sellers. For Shorting a stock, an investor has to borrow shares of that stock, sell them immediately, and later repurchase them if the stock’s price falls as anticipated, profiting from the price difference.
HazelTree keeps tabs on the level of interest a stock generates in terms of supply and demand among short sellers. Rivian Automotive led in institutional supply utilization at 37%, a substantial lead over ExxonMobil’s 3.13% and Tesla’s 2.67%.
Exxon’s year-to-date performance has dipped about 6%, while Tesla has experienced an impressive 76% increase in its stock price this year. However, Tesla faces challenges related to uncertain electric vehicle demand and competitive pressures that have forced price reductions throughout 2023.
Despite a strong start for the major stock market indices in November, with the S&P 500 enjoying its best winning streak in two years, not all of Wall Street’s bearish forecasters share the belief that this rally will be long-lasting. Morgan Stanley’s chief stock strategist, Mike Wilson, stated this week that these gains are more likely a bear market rally than an indicator of sustained upward momentum.
“We think last week’s rally in stocks was mainly a function of the fall in back-end Treasury yields,” Wilson wrote in a note Monday. “In our view, the drop in Treasury yields was more related to the lower than expected coupon issuance guidance and weaker economic data as opposed to the bullish interpretation (for equities) that the Fed is going to cut rates earlier next year in the absence of a labor cycle.”
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