Hedge funds have had a great year picking stocks. But there’s a dark underbelly to their investment activity that involves betting on companies to falter.
To see which stocks bear the biggest burden of hedge fund shorts, the equity strategy team at Goldman Sachs analyzes 821 funds that hold a combined $1.9 trillion in gross equity positions, then identifies the stocks that have the highest dollar value of short interest outstanding.
Known as the Very Important Short Position list, the basket excludes companies in Goldman’s hedge fund VIP index, as well as stocks with more than 10% of float-adjusted shares held short. It also has a large-cap bias, with a median market capitalization of $71 billion, compared with $20 billion for the S&P 500.
Here’s a list of the 18 stocks in the index that have the highest level of short interest:
18. Target
Subsector: General merchandise stores
Total return year-to-date: -21%
Value of short interest: $1.9 billion
Source: Goldman Sachs
17. Boeing
Subsector: Aerospace & defense
Total return year-to-date: 16%
Value of short interest: $2 billion
Source: Goldman Sachs
16. Lam Research
Subsector: Semiconductor equipment
Total return year-to-date: 42%
Value of short interest: $2 billion
Source: Goldman Sachs
15. Procter & Gamble
Subsector: Household products
Total return year-to-date: 4%
Value of short interest: $2 billion
Source: Goldman Sachs
14. Simon Property Group
Subsector: Retail REITs
Total return year-to-date: -12%
Value of short interest: $2 billion
Source: Goldman Sachs
13. CVS Health
Subsector: Drug retail
Total return year-to-date: -2%
Value of short interest: $2 billion
Source: Goldman Sachs
12. Express Scripts
Subsector: Health care services
Total return year-to-date: -14%
Value of short interest: $2 billion
Source: Goldman Sachs
11. Chevron
Subsector: Integrated oil & gas
Total return year-to-date: -9%
Value of short interest: $2.1 billion
Source: Goldman Sachs
10. AbbVie
Subsector: Biotechnology
Total return year-to-date: 7%
Value of short interest: $2.2 billion
Source: Goldman Sachs
9. Intuitive Surgical
Subsector: Health care equipment
Total return year-to-date: 36%
Value of short interest: $2.2 billion
Source: Goldman Sachs
8. Caterpillar
Subsector: Construction machinery & heavy trucks
Total return year-to-date: 10%
Value of short interest: $2.2 billion
Source: Goldman Sachs
7. ExxonMobil
Subsector: Integrated oil & gas
Total return year-to-date: -8%
Value of short interest: $2.3 billion
Source: Goldman Sachs
6. General Electric
Subsector: Industrial conglomerates
Total return year-to-date: -12%
Value of short interest: $2.7 billion
Source: Goldman Sachs
5. Walmart
Subsector: Hypermarkets & super centers
Total return year-to-date: 14%
Value of short interest: $2.7 billion
Source: Goldman Sachs
4. NVIDIA
Subsector: Semiconductors
Total return year-to-date: 25%
Value of short interest: $3 billion
Source: Goldman Sachs
3. IBM
Subsector: IT consulting & other services
Total return year-to-date: -8%
Value of short interest: $3 billion
Source: Goldman Sachs
2. Intel
Subsector: Semiconductors
Total return year-to-date: -1%
Value of short interest: $3.3 billion
Source: Goldman Sachs
1. AT&T
Subsector: Integrated telecommunications services
Total return year-to-date: -9%
Value of short interest: $5.3 billion
Source: Goldman Sachs
SEE ALSO:
GOLDMAN SACHS: These are the 14 VIP stocks that matter most to hedge funds