A summary of the movements of smart money: Which stocks are American hedge funds currently shorting?

Original author: Caixin News

Reprint: White55, Mars Finance

With the recent turbulence in the U.S. stock market and a surge in Oracle CDS (Credit Default Swap) trading, even insiders in the AI field have begun to admit that there is some bubble in the market. This has made it a focal point for many investors on how, when, and where active institutions like hedge funds are shorting the market.

Fortunately, the latest hedge fund positioning report released by Goldman Sachs covers a lot of valuable information worth digging into. The core finding from the Goldman Sachs report is that the so-called “smart money” is not yet ready to aggressively short AI giants, but some institutions have already begun to target relatively weaker companies in this field…

Short positions in the U.S. stock market are at a high level in recent years.

Let's first take a look at the overall market situation. Despite experiencing a strong upward trend this year, the median short interest as a percentage of the S&P 500 index constituents remains astonishingly high. The current short positions amount to 2.4% of the total market capitalization, placing it in the 99th percentile over the past five years—and far exceeding the long-term average since 1995.

Industry insiders actually noticed the resurgence of short-selling interest in the US stock market as early as May this year. Interestingly, since then, this level has continued to rise slightly and remain high—despite two small but painful short squeezes occurring in mid-July and mid-October.

In different index aspects, the Nasdaq 100 index, dominated by technology stocks, currently has a short ratio slightly higher than the S&P 500, at 2.5%. Of course, the highest short positions are still found in small-cap stocks, with the median short ratio for the Russell 2000 index constituents currently reaching 5.5%.

Is the utility sector a microcosm of the AI bubble?

In specific industry sectors, the most noteworthy recent development may be the surge in the short ratio in the utility sector.

The short-selling ratio in this sector has increased by 0.3 percentage points to 3.2%. Although it doesn't seem particularly high, according to Goldman Sachs data, this has reached one of the highest levels in the sector's history.

Industry insiders suggest that this may also be an indirect reflection of the artificial intelligence bubble. After all, the data centers required to support AI models have a very high energy consumption intensity, which has made utility stocks, previously overlooked, appear quite attractive this year.

Taking the American electric company (AEP) as an example, its stock price has risen by more than 31% this year, with a market value of 65 billion dollars. Last month, the company increased its five-year capital expenditure plan from the already substantial 54 billion dollars to 72 billion dollars, mainly to power data centers built for companies such as Google's parent company Alphabet, Amazon, and Meta.

According to Koyfin data, the short selling ratio of this stock has now risen to 4%, far exceeding the normal range of 1%-2% over the past decade.

Which stocks are the favorites of the bears?

So, have utility companies become the most popular short-selling targets in Goldman Sachs data? The answer is not quite so—after all, compared to other industries, the overall short-selling scale in this sector remains moderate—regardless, utility companies themselves carry a “defensive halo” in the eyes of many industry insiders.

According to Goldman Sachs' report, Tesla once again “topped” the list of the most shorted stocks in the US, while “newcomer” JPMorgan surprisingly appeared in fourth place. It is worth mentioning that many other new members in Goldman Sachs' heavily shorted stock basket—highlighted in bold black in the table below—can fairly be categorized as weaker AI participants or AI-related stocks that are severely bubble-affected.

Goldman Sachs statistics show that the short position against Oracle has reached $5.4 billion, Intel's short position has reached $4.6 billion, and General Electric ( has a short position of $4.1 billion for its gas turbines for AI data centers ).

Of course, many of these companies are large corporations, so in terms of the percentage of short positions relative to the overall market value, the proportion of these short positions is still very small—Oracle is at 1%, Intel and General Electric are at 3%.

So, which stocks are the most shorted relative to their market capitalization?

According to Goldman Sachs' statistics, the most shorted U.S. stock with a market capitalization of at least $25 billion is Bloom Energy. The stock rose to a high of $147.86 earlier this month, nearly ten times its approximate $15 value in April, but has since significantly dropped back below $100 in recent trading days. Some industry insiders believe it has reached a stage where “people will look back and smile wryly in the future.”

The remaining heavily shorted stocks on the Goldman Sachs list include Strategy, CoreWeave, Coinbase, Live Nation, Robinhood, and Apollo.

Finally, it is important to remind investors that Goldman Sachs' hedge fund holdings report is only a delayed snapshot of the current market situation, although it has considerable reference value—this report is based on the latest disclosed holdings data from up to 982 hedge funds, with total equity positions reaching $4 trillion, including long positions of $2.6 trillion and short positions of $1.4 trillion.

From the market trends at the beginning of this week, it seems that the US stock market has resumed its upward momentum after the sharp fluctuations last week. Given that the duration of the bubble may far exceed the corporate solvency limits, many hedge funds are also cautious about shorting AI giants ( hyperscaler ). In fact, statistics from Goldman Sachs show that Amazon, Microsoft, Meta, NVIDIA, and Google's parent company Alphabet are currently the five most common long positions for US hedge funds.

At the same time, the rise of short positions in utilities and some poorly performing AI concept stocks still indicates that some investors may be starting to tentatively position themselves for the next major shorting opportunity that may arise in the industry.