In this article, we take a look at the 10 most shorted stocks in 2022. To skip our in-depth analysis of these stocks and shorting a stock strategy, you can jump to the page 5 stocks with the most short sales in 2022.
This September, Apple Inc. (NASDAQ:AAPL) overtook Tesla, Inc. (NASDAQ:TSLA) as the most shorted stock in the US market. According to the Wall Street Journal, traders across the country have placed approximately $18.4 billion worth of bearish bets related to Apple Inc. (NASDAQ:AAPL). Tesla, Inc. (NASDAQ:TSLA) had held the title of America’s most shorted stock for over two years, with its current short interest at approximately $17.4 billion. The iPhone maker became the most shorted stock at $18.4 billion short yield.
Short selling has long been a popular investment strategy for many investors. Traders with opposing views on different stocks have continued to employ this strategy across a range of stocks, with the most notable example in recent history being that of “meme stock” GameStop Corp. (NYSE:GME) is. In January 2021, a video game retailer short squeeze resulted in lavish financial losses for hedge funds and short sellers alike. Approximately 140% of the company’s stock was sold short, resulting in a shortage of the company’s stock that drove up the price. Initiated by Reddit users from the r/wallstreetbets subreddit, the short squeeze was created by GameStop Corp. (NYSE:GME) has quickly become an investment legend.
Shorting stocks can lead to extraordinary gains for investors, as past examples show. According to a Bloomberg report, the ProShares Short S&P 500 ETF reaped huge gains between 2020 and August 2022 due to its short selling strategy. The ETF, valued at over $3 billion, is focused on betting against the S&P 500. Traders added about $154.4 million to the ETF by the end of August, marking the largest one-day increase for the ETF since April 2020 . Two ETFs from ProShares, which focuses on placing bearish bets on technology stocks, managed to generate positive net inflows during the August trading sessions this year.
Photo by Adam Nowakowski on Unsplash
Now let’s take a look at the 10 most shorted stocks in 2022.
Our methodology
We have selected the stocks with the most short sales in 2022 based on factors such as the percentage of each company’s total free float that is shorted, their short interest rate value and percentage, among others. We’ve ranked these stocks from lowest to highest based on the number of hedge funds that own them.
Most shorted stocks in 2022
10. Revlon, Inc. (NYSE:REV)
Number of hedge fund holders: 14
Revlon, Inc. (NYSE:REV) is a consumer products company developing beauty and personal care products for sale worldwide. The company is based in New York, USA. Some of the notable brands are Revlon ColorSilk and Revlon Professional.
As of June 2022, Revlon, Inc. (NYSE:REV) was one of the most shortened American stocks. About 73.3% of the company’s total free float was short by then. The company’s annual revenue growth is currently 0.6%.
During the second quarter, 14 hedge funds held shares in Revlon, Inc. (NYSE:REV) for a total of $65.3 million. Covalent Capital Partners was the company’s largest shareholder, holding 316,600 shares worth $1.7 million.
Investment management firm Mittleman Brothers Investment Management mentioned Revlon, Inc. (NYSE:REV) in its Q2 2022 letter to investors. Here’s what the company said:
“After all, MIM has already communicated regarding the Revlon, Inc. (NYSE:REV) filing for bankruptcy June 15, see this link in case you missed it as MIM’s opinion remains unchanged here: Revlon Bankruptcy
Revlon has since rallied from its pre-bankruptcy low of $1.08 on June 13 to above $9.00 several times, on June 22 and again on August 1, and during those two trading sessions MIM sold a good chunk of its position at just over $9.00/share considering Chris’ reduced fair value estimate is $10 (down from the mid 20’s). If the bankruptcy proceedings result in an auction of the assets, the realization could be well over $10 per share simply by applying the range of current market multiples. However, bankruptcy brings with it significant costs, uncertainties and risks that could affect fairness. Therefore, it makes sense to reduce the weighting of these periodic price spikes.
MIM continues to believe there are many buyers for these assets who could easily pay the 2x sales and 14x EBITDA required (according to Chris’ math) for equity to be around $10 per share recovered. 15 times EBITDA would be nearly $16 per share. 16x would be $22. And there are also some new unexpected potential buyers…” (Click here to read more)
Revlon, Inc. (NYSE:REV) was like Apple Inc. (NASDAQ:AAPL), Tesla, Inc. (NASDAQ:TSLA) and GameStop Corp. (NYSE:GME) one of the top short stocks in the US this year.
9. Bed Bath & Beyond Inc. (NASDAQ:BBBY)
Number of hedge fund holders: 14
Bed Bath & Beyond Inc. (NASDAQ:BBBY) is a retail company that, through its subsidiaries, operates a chain of retail stores. The company sells household goods such as bed linen, bathroom articles and kitchen textiles, among other things. It also offers home textiles, consumables and a range of products for teenagers.
On September 1st, a market perform rating for shares of Bed Bath & Beyond Inc. (NASDAQ:BBBY) was repeated by analyst Bobby Griffin at Raymond James.
As of August this year, Bed Bath & Beyond Inc. (NASDAQ:BBBY) was among the top short interest US stocks. The stock is up 42% on Aug. 16 and has a short exposure of 47.2%.
Bed Bath & Beyond Inc. (NASDAQ:BBBY) had 14 hedge funds totaling $23.1 million long its shares during the second quarter. In comparison, 15 hedge funds totaling $69.3 million were long the stock in the previous quarter.
8. CompoSecure Inc. (NASDAQ:CMPO)
Number of hedge fund holders: 14
CompoSecure Inc. (NASDAQ:CMPO) is an information technology company focused on the manufacture of metal, plastic, composite ID cards and proprietary financial transaction cards in the United States and internationally. The company is based in Somerset, New Jersey. Metal form factors mainly include Embedded, Metal Veneer Lite, Metal Veneer and Full Metal products.
As of September of this year, CompoSecure Inc. (NASDAQ:CMPO) had a short interest of 91.7%. The short value of the company’s shares was $8.4 million. Year-over-year revenue growth is currently 32.3% and operating cash flow growth is 50.9% year-over-year.
CompoSecure Inc. (NASDAQ:CMPO) was found among the 13F holdings of 14 hedge funds with a total holding value of $20.2 million during the second quarter. Of these funds, LMR Partners was the company’s largest shareholder, holding approximately $1.2 million worth of stock of approximately $6.5 million.
7. GameStop Corp. (NYSE:GME)
Number of hedge fund holders: 17
GameStop Corp. (NYSE:GME) is a computer and electronics retail company. It offers games and entertainment products through its e-commerce properties and stores. The Company primarily operates in the United States, Canada, Australia and Europe.
This September, after GameStop Corp. (NYSE:GME) announced a new partnership with FTX, the stock rose 11.06%. The new partnership could help attract more buyers for GameStop Corp products. (NYSE:GME) as the company will begin stocking FTX gift cards in select stores from now on. Year-over-year sales growth is currently 8.5% and short volume is over 49 million shares.
Our hedge fund data shows 17 hedge funds were long GameStop Corp during the second quarter. (NYSE:GME) and 18 hedge funds were long the stock during the previous quarter. Their total bet values were $64.5 million and $265.6 million, respectively.
Investment management company Bireme Capital mentioned GameStop Corp. (NYSE:GME) in its Q2 2022 Investor Letter. Here’s what it said:
“Astonishing, GameStop Corp. (NYSE:GME) is one of our few short positions not falling in 2022. The stock trades at a market cap of $11.5 billion, surpassing its pre-pandemic peak by billions of dollars. This is despite the fact that revenue is down 30% from the peak, gross margins are down 1,500 basis points, and the company has generated negative free cash flow of $700 million over the last four quarters (we still had to get that number check once because it is so high).
Wall Street has consistently revised downwards its estimates of Gamestop’s profitability, making the stock price’s stability in 2022 even more confusing. Analysts are currently estimating an EBITDA loss of around $400 million, significantly worse than their 2/3/22 estimate of a loss of $60 million. Their recently launched NFT marketplace will do nothing to fix their core business and is about a year late to be relevant in the NFT space. Instead, we see this as yet another example of a meme public company hoping to fork into a new business model and use the stock’s popularity to push new lines of business. We are not optimistic and believe that the $11.5 billion market cap drastically overstates Gamestop’s ability to morph into something more profitable. We think it is unlikely that Gamestop will ever report GAAP earnings again.”
6. EVgo Inc. (NASDAQ: EVGO)
Number of hedge fund holders: 18
EVgo Inc. (NASDAQ:EVGO) is an automotive retailer that operates a network of DC fast chargers in the United States. The company provides power directly to EV drivers who can access its connected chargers and OEM chargers and related services nationwide. It is based in Los Angeles, California.
Jefferies’ David Kelley began reporting on EVgo Inc. (NASDAQ:EVGO) stock on July 7 and gave the stock a Hold rating. The analyst also set a price target of $5.5 on the stock.
EVgo Inc. (NASDAQ:EVGO) was among the most shorted American stocks this August, with a 34.9% short exposure. The company’s revenue growth is 80.3% year-on-year. Revenue for the second quarter of 2022 was $9.08 million, exceeding the previous quarter’s revenue of $7.7 million.
LMR Partners was the largest shareholder of EVgo Inc. (NASDAQ:EVGO) out of 18 hedge funds long the stock during the second quarter. The fund held 1.2 million shares valued at $7.1 million based on the total share value of $15.7 million.
EVgo Inc. (NASDAQ:EVGO) is like Apple Inc. (NASDAQ:AAPL), Tesla, Inc. (NASDAQ:TSLA) and GameStop Corp. (NYSE:GME) a profitable short position that many hedge funds are interested in today.
Click here to read on for the 5 most shorted stocks in 2022.
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Disclosure: none. 10 stocks with the most short sales in 2022 was originally published on Insider Monkey.
