World Stock Watch

Short Sellers Are Piling On: Should You Be Worried About These 5 Stocks?

The S&P 500 has been on a tear this year, with gains of over 23%. However, some investors are betting against certain stocks in the index, hoping to profit from a potential decline. Short selling is a common practice on Wall Street, but it can be a high-risk strategy if not executed properly.

In this article, we’ll take a closer look at the five most shorted stocks in the S&P 500 and examine the reasons behind the bearish sentiment. We’ll also highlight one stock that we think the bears are wrong about.

The Most Shorted Stocks in the S&P 500

1. Super Micro Computer (SMCI): With over 21% of its available shares sold short, Super Micro Computer tops the list. The company has been a beneficiary of the artificial intelligence boom, but a recent short report from Hindenburg Research has raised concerns about accounting improprieties.
2. Day Force (DAY): Day Force, a cloud-based human resource platform, has over 16% of its float sold short. The stock has been under pressure due to concerns about its valuation, which is over 210 times earnings.
3. International Paper (IP): International Paper, a paper manufacturer, has over 15.5% of its publicly available shares sold short. The stock has been impacted by takeover rumors and concerns about the company’s acquisition of DS Smith.
4. Walgreens Boots Alliance (WBA): Walgreens Boots Alliance, a pharmacy chain, has seen its stock tank over 60% this year. The company has been struggling with increasing competition from online players and operational issues.
5. Aptiv (APTV): Aptiv, an auto technology company, rounds out the list with over 14% of its shares sold short. The stock has been impacted by weakening demand for electric vehicles and increased competition.

The Bears Are Wrong About Aptiv

While the bears are piling on Aptiv, we think they’re wrong. The company has several tailwinds, including government stimulus in China, which should help the country rebound. Aptiv has also announced a new $5 billion share repurchase program, showing that management is confident in the stock. With a price-to-earnings ratio of 5.3, we think Aptiv is undervalued and poised for a rebound.

Conclusion

Short selling can be a high-risk strategy, but it can also provide opportunities for investors who are willing to do their research. While the bears are piling on these five stocks, we think Aptiv is a diamond in the rough. As always, it’s essential to do your own research and consider multiple perspectives before making any investment decisions.