In the current market surge, dominated by the ascent of technology stocks, certain hedge funds are taking positions against a select group of retailers and automotive companies. The S&P 500, having recently breached another bull market milestone on January 19, has maintained its upward momentum over the past six trading sessions in tandem with the Nasdaq Composite. The broader market index has notched record highs for five consecutive trading days, marking its lengthiest streak since November 2021, and is set to conclude the week with a gain of over 2.2%.
Amidst this market rally, scrutiny of the latest short interest data reveals vulnerable stocks that could face losses. Short interest gauges the quantity of shares that an investor has borrowed and sold with the expectation of repurchasing them at a lower price, thereby profiting from the price differential.
Analyzing FactSet data, CNBC Pro identified stocks traded on the New York Stock Exchange and Nasdaq Exchange with the highest short interest as of January 12. Each of these stocks possesses a market capitalization exceeding $100 million, with short interest constituting at least 25% of their float—the number of outstanding shares available for trading.
Fisker, an electric vehicle manufacturer, continues to attract significant short interest, escalating by 12% to surpass 100 million shares, equivalent to approximately 53% of the stock’s float. Fisker has witnessed a decline of over 54% since the beginning of the year, compounding its challenges after a tumultuous 2023 marked by a 76% plunge in share value. The company grapples with delivery target failures and has revised down its year-end production forecast, resulting in Fisker's stock price languishing below $1.
Lucid Group, another player in the electric vehicle sector, experienced an uptick in short interest to around 29% of its float, coinciding with a more than 36% drop in its share value since the start of the year. Short bets against Vietnamese EV manufacturer VinFast Auto also increased by 12% to 8.6 million shares, constituting approximately 27% of its float. While VinFast faced challenges in meeting its 2023 car delivery targets due to market dynamics and slower EV adoption in certain regions, the company reported an uptick in deliveries in the fourth quarter of 2023 compared to previous quarters.
Short interest also rose for companies engaged in auto parts manufacturing, such as Luminar Technologies and Atmus Filtration. Luminar, despite a notable 23% jump in the current week, has seen a nearly 19% decline in the year-to-date period. Goldman Sachs recently lowered its price target for Luminar, maintaining a sell rating.
Among retailers, thrift store chain Savers Value Village and department store Kohl’s experienced increases in short interest by 3% and 8%, respectively. Savers Value Village's shares have gained 4.8% in the year, including a 5.3% advance this week, following the company's optimistic outlook on fourth-quarter and full-year net sales for 2023. Conversely, Kohl’s shares have incurred a modest loss of under 1%.
In the biotech sector, several companies observed significant decreases in short interest in the first half of January, including Dyne Therapeutics, Enliven Therapeutics, Cassava Sciences, and Allogene Therapeutics. This evolving landscape highlights the dynamic interplay between short interest, market trends, and specific company dynamics in a multifaceted market environment.
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