Hedge funds are a key force in the stock market, influencing trends with their bullish and bearish bets. Recent data reveals which stocks hedge funds love and which ones they are betting against the most. Understanding these trends can offer retail investors valuable insights into market sentiment and potential opportunities.

The Market’s Least Shorted Stocks – Hedge Funds’ Favorites

The least shorted stocks indicate companies that hedge funds have confidence in, as short interest (the percentage of shares sold short) remains extremely low. These stocks are seen as strong performers with stable fundamentals.

1. Walmart (WMT): Short interest: 0.45%

  • The retail giant continues to thrive with strong consumer demand and an expanding e-commerce presence.

2. Philip Morris International (PM): Short interest: Well under 1%

  • A leader in the tobacco industry, Philip Morris is pivoting toward reduced-risk products, making it attractive to long-term investors.

3. Mastercard (MA): Short interest: Well under 1%

  • The global payment processor benefits from increasing digital transactions and strong financials.

4. Amazon (AMZN): Short interest: Well under 1%

  • Amazon dominates e-commerce and cloud computing, making it a resilient stock that hedge funds avoid betting against.

5. Chubb (CB): Short interest: Well under 1%

  • A leading property and casualty insurer, Chubb has a strong balance sheet and reliable cash flows.

These stocks demonstrate solid business models, financial stability, and growth potential, making them safer bets in an uncertain market.

The Market’s Most Shorted Stocks – Hedge Funds Bet Against These

On the flip side, some stocks have high short interest, meaning hedge funds expect them to decline due to financial instability, market headwinds, or industry challenges.

1. Enphase Energy (ENPH): Short interest: 16.7%

  • Despite being a leader in solar energy solutions, Enphase has faced concerns about demand slowdowns and margin pressures.

2. Super Micro Computer (SMCI): Short interest: Over 10%

  • While benefiting from AI and server demand, concerns over valuation and competition have led hedge funds to bet against it.

3. Albemarle (ALB): Short interest: Over 10%

  • A major lithium producer, Albemarle is struggling with declining lithium prices and oversupply fears.

4. Fox Corporation (FOX): Short interest: Over 10%

  • Media companies face increasing competition from digital platforms, and Fox’s revenue model has raised investor skepticism.

5. Moderna (MRNA): Short interest: Over 10%

  • As COVID-19 vaccine demand declines, Moderna is searching for new revenue sources, leading to uncertainty about its future earnings.

Stocks with high short interest can be risky but also present opportunities for sharp rebounds if sentiment shifts (known as a short squeeze).

Why This Matters for Investors

Watching hedge funds’ favorite and most shorted stocks can help investors gauge market trends and sentiment. Stocks with low short interest are seen as safer investments, while highly shorted stocks carry risk but also potential upside if market conditions improve.

Should you follow hedge funds’ strategies? While institutional investors have access to deep research, individual investors should still do their own due diligence before making any investment decisions. Understanding market sentiment, company fundamentals, and industry trends can help navigate these insights wisely.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

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