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ExxonMobil Corp recently claimed the title of the most shorted large-cap stock in the S&P 500, dethroning Tesla, according to a report by HazelTree. Short selling is a strategy in which investors bet that a company’s share price will decline.
For the past four months, Tesla held the top position as the most shorted stock, but ExxonMobil’s recent ascension has shifted the landscape.
HazelTree assigns a “Crowdedness Score” to short bets, ranging from one to 99, with higher scores indicating a greater percentage of funds betting against a particular stock. The firm analyzes data from over 12,000 global equities and more than 700 funds.
In the large-cap category, ExxonMobil and Tesla led the pack with Crowdedness Scores of 99 and 97, respectively. They were followed by Apple (94), Charter Communications (91), Broadcom (91), Rivian Automotive (86), US Bank Corp (83), SNAP (83), Ford (78), and AirBnB (78).
Within the mid-cap sector, the three most shorted stocks were SOFI Technologies (99), American Airlines (92), and electric vehicle manufacturer Lucid (92).
The report also highlighted the percentage of a particular stock’s supply that institutional investors were willing to loan to short sellers. To short a stock, investors must borrow shares, sell them, and later repurchase them at a lower price, pocketing the difference. HazelTree tracks the “hotness” of stocks in terms of supply and demand for short selling.
Rivian Automotive led the way in institutional supply utilization, with 37%, significantly higher than ExxonMobil’s 3.13% and Tesla’s 2.67%.
ExxonMobil’s stock has seen a year-to-date decline of around 6%, while Tesla has surged by 76% in 2023. However, Tesla faces challenges related to uncertain electric vehicle demand and intense competition, which has led to price reductions on its vehicles during the year.
Despite the strong start to November in the stock market, with the S&P 500 experiencing its best winning streak in two years, some bearish forecasters on Wall Street remain skeptical about the rally’s sustainability. Mike Wilson, the chief stock strategist at Morgan Stanley, suggests that the recent rally is more likely a bear market rally than a sign of prolonged upside, mainly driven by the fall in back-end Treasury yields. Wilson believes that the drop in Treasury yields is associated with lower-than-expected coupon issuance guidance and weaker economic data rather than an indication that the Fed will cut rates earlier next year due to the absence of a labor cycle.
