Facebook Inc (FB) shares shorted has more than halved in 2019, declining by 19.5 million shares, -56.5%. In April 3.8 million short shares were covered, -20.0%, as short sellers prepared for positive Facebook earnings results after a slew of unfavorable news stories centering around user data and privacy concerns.
The FAANG stocks are five of the top ten most shorted stocks in the domestic U.S. stock market and because of the sheer size of combined short exposure they represent both risk â€śAlphaâ€ť trades and hedging â€śBetaâ€ť trades.
FAANG stocks (FB, AMZN, AAPL, NFLX & GOOGL) were down 4.7% last week, 3.6% on Friday alone, after Amazon.com and Alphabet announced disappointing quarterly results amid overall weakness in the tech sector. While long shareholders incurred large losses from these widely held stocks, short sellers made $1.62 billion in mark-to-market profits last week.
Tesla Inc (TSLA) and the FAANG stocks continue to be some of the largest shorts in the U.S. market, taking five of the top ten spots in the U.S. league table. While Tesla is a momentum, value and convertible arbitrage short, one of the main drivers for the large short interest in the FAANG stocks is their ability to be a â€śturbochargedâ€ť hedge for the long side of a portfolio.
Facebook Inc.â€™s (FB) stock price declined by 19% on a slower growth outlook and weaker than expected 2nd quarter ad revenues. Short sellers, who had covered 12 million shares of their short positions since early April, had kept their Facebook short exposure stable over the past week ahead of earnings. The pause in short covering proved prescient as the todayâ€™s stock price decline earned short sellers $1.05 billion of mark-to-market profits.
Tracking $1.6 trillion of worldwide short interest in S3â€™s Blacklight SaaS platform and standalone Black App we can see which shorted securities had the most and least profitable month of April on a mark-to-market P/L basis. Iâ€™ll be breaking down the top ten winners and losers in the U.S., Worldwide ex-U.S. and worldwide Exchange Traded Products.
Every week, S3 tracks short sellersâ€™ equity positions in the US, revealing the trades that delivered positive results or missed the mark.Â After tracking $890 billion worth of short positions, the following is a list of this weekâ€™s top five best and worst performing shorts.