In a report released on Tuesday, securities lending data firm Hazeltree revealed that Tesla secured its position as the most shorted large-cap U.S. stock for the third consecutive month in August.
The electric vehicle giant experienced a surge of over 5% in its stock value on Monday, following a note from Morgan Stanley. The note suggested that Tesla’s advanced Dojo supercomputer could potentially bolster the company’s market value.
A short bet is a financial strategy where investors anticipate a decline in a stock’s price.
According to Hazeltree, which meticulously tracks 12,000 equities on a global scale, Charter Communications and Apple claimed the second and third positions, respectively, on the list of most shorted stocks last month.
Data gathered by research firm Whale Wisdom shed light on a variety of strategies employed in short bets against Tesla, as disclosed to the Securities and Exchange Commission as of June 30. Among these strategies were investors utilizing funds to hold both long and short positions in stocks, with notable entities including Diamond Hill, Leuthold Funds, and Forum Funds. Additionally, a fund of funds managed by Blackstone featured the short positions of other hedge funds and investment managers.
Hedge fund AQR Capital Management and investment manager Federated Hermes executed trades designed to mitigate market risk by offsetting fluctuations in prices across different asset classes.
In a recent biography of Elon Musk authored by Walter Isaacson, the Tesla CEO’s response to Microsoft co-founder Bill Gates’ historic short position against the company was revealed. Musk took to his social media platform, X, to assert, “Taking out a short position against Tesla, as Gates did, results in the highest return only if a company goes bankrupt!”
Goldman Sachs highlighted in a recent note that hedge funds have been actively shorting U.S. stocks in recent weeks, culminating in the highest total value of short bets in six months. Furthermore, the note indicated that hedge funds maintained a net short position in consumer discretionary stocks, encompassing Tesla, for the year ending on Sept. 8.
Dan Izzo, the founder of the hedge fund Blackbird Capital, candidly shared, “If I’m honest, I’ve only lost money trying to short TSLA.” However, he did not disclose whether he currently held a position in Tesla. Izzo emphasized the challenge of navigating a market that can remain irrational for extended periods, often longer than one can afford to hold a short position.
Tesla was reported the most shorted large-cap US stock for the third consecutive month in August. In the grand scheme, the standing of the world’s premier electric automaker remains under intense scrutiny from the market. Investors continue to engage in a constant tug-of-war, placing bets both for and against Tesla. The question of whether Tesla will ultimately vindicate its supporters or prove the skeptics right looms on the horizon.
Source: Reuters
