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The 10 Most Heavily-Shorted Stocks of January 2021

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Short Sellers and the Most Shorted Stocks in January 2021

The Briefing

  • Retail brands, among others, have been the target of short sellers amidst the COVID-19 pandemic
  • Individual investors have rallied behind a number of these stocks in an attempt to force a “short-squeeze”

Short Sellers Look to Profit from Struggling Companies

The prospects of retailers such as GameStop have deteriorated over the course of the COVID-19 pandemic, leading many hedge funds to bet against them by taking short positions.

Shorting a company involves borrowing its shares, selling them at current prices, and then buying them back in the future at what is hopefully a lower price. Essentially, short sellers are betting that the company will underperform in the future.

The 10 Most Heavily-Shorted Stocks of January 2021

The following companies had the highest short interest as of January 29, 2021. Short interest is the % of a company’s shares that have been borrowed and sold, but not yet returned.

CompanyShort Interest (%)YTD Return (%)Sector
GameStop121%422%Consumer Discretionary
Dillards95%40%Consumer Discretionary
AMC Entertainment79%289%Communication Services
Virgin Galactic72%109%Industrials
fuboTV72%100%Communication Services
Bed Bath & Beyond65%41%Consumer Discretionary
Ligand Pharmaceuticals65%75%Health Care
National Beverage Corp.63%44%Consumer Staples
SunPower58%73%Technology
Tanger Factory Outlet Centers52%32%Real Estate

Source: YTD returns as of Feb. 2, 2021

Many of the companies on this list are brick-and-mortar based retailers that have struggled to attract business during COVID-19 lockdowns. This includes GameStop, Dillards, Bed Bath & Beyond, and AMC Entertainment, America’s largest operator of movie theatres.

Short sellers have also targeted Tanger Factory Outlet Centers for similar reasons. The mall operator’s revenues fell to $64 million in Q3 2020, a 45% drop from the same quarter in 2019. The expectation that a quarter of U.S. malls will close by 2025 could also be a factor for the company’s high short interest.

Retail Investors Clash with Short Sellers

If these companies are expected to fail, why are their share prices making double, and sometimes triple-digit gains? The answer is a phenomenon known as the “short squeeze”.

In an unprecedented move, retail investors have banded together to buy millions of dollars worth of shares to push these companies’ stock prices up, rather than down.

This has forced short sellers to repurchase the shares that they previously borrowed (and sold) at a much higher price. This places even greater upward pressure on the stock, and can result in the triple-digit gains seen in the case of GameStop.

Where does this data come from?

Source: FactSet
Notes: Short interest data as of January 29, 2020. YTD returns as of Feb. 2, 2021.

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Economy

Charted: Public Trust in the Federal Reserve

Public trust in the Federal Reserve chair has hit its lowest point in 20 years. Get the details in this infographic.

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The Briefing

  • Gallup conducts an annual poll to gauge the U.S. public’s trust in the Federal Reserve
  • After rising during the COVID-19 pandemic, public trust has fallen to a 20-year low

 

Charted: Public Trust in the Federal Reserve

Each year, Gallup conducts a survey of American adults on various economic topics, including the country’s central bank, the Federal Reserve.

More specifically, respondents are asked how much confidence they have in the current Fed chairman to do or recommend the right thing for the U.S. economy. We’ve visualized these results from 2001 to 2023 to see how confidence levels have changed over time.

Methodology and Results

The data used in this infographic is also listed in the table below. Percentages reflect the share of respondents that have either a “great deal” or “fair amount” of confidence.

YearFed chair% Great deal or Fair amount
2023Jerome Powell36%
2022Jerome Powell43%
2021Jerome Powell55%
2020Jerome Powell58%
2019Jerome Powell50%
2018Jerome Powell45%
2017Janet Yellen45%
2016Janet Yellen38%
2015Janet Yellen42%
2014Janet Yellen37%
2013Ben Bernanke42%
2012Ben Bernanke39%
2011Ben Bernanke41%
2010Ben Bernanke44%
2009Ben Bernanke49%
2008Ben Bernanke47%
2007Ben Bernanke50%
2006Ben Bernanke41%
2005Alan Greenspan56%
2004Alan Greenspan61%
2003Alan Greenspan65%
2002Alan Greenspan69%
2001Alan Greenspan74%

Data for 2023 collected April 3-25, with this statement put to respondents: “Please tell me how much confidence you have [in the Fed chair] to recommend the right thing for the economy.”

We can see that trust in the Federal Reserve has fluctuated significantly in recent years.

For example, under Alan Greenspan, trust was initially high due to the relative stability of the economy. The burst of the dotcom bubble—which some attribute to Greenspan’s easy credit policies—resulted in a sharp decline.

On the flip side, public confidence spiked during the COVID-19 pandemic. This was likely due to Jerome Powell’s decisive actions to provide support to the U.S. economy throughout the crisis.

Measures implemented by the Fed include bringing interest rates to near zero, quantitative easing (buying government bonds with newly-printed money), and emergency lending programs to businesses.

Confidence Now on the Decline

After peaking at 58%, those with a “great deal” or “fair amount” of trust in the Fed chair have tumbled to 36%, the lowest number in 20 years.

This is likely due to Powell’s hard stance on fighting post-pandemic inflation, which has involved raising interest rates at an incredible speed. While these rate hikes may be necessary, they also have many adverse effects:

  • Negative impact on the stock market
  • Increases the burden for those with variable-rate debts
  • Makes mortgages and home buying less affordable

Higher rates have also prompted many U.S. tech companies to shrink their workforces, and have been a factor in the regional banking crisis, including the collapse of Silicon Valley Bank.

Where does this data come from?

Source: Gallup (2023)

Data Notes: Results are based on telephone interviews conducted April 3-25, 2023, with a random sample of –1,013—adults, ages 18+, living in all 50 U.S. states and the District of Columbia. For results based on this sample of national adults, the margin of sampling error is ±4 percentage points at the 95% confidence level. See source for details.

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