Insider Monkey
10 Best High Short Interest Stocks to Buy Now
Usman Kabir
9 min read

In This Article:

In this article, we discuss the 10 best high short interest stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best High Short Interest Stocks to Buy Now.

Stocks with high short interest have dominated the headlines in the finance world for a good part of this year. In January, the GameStop Corp. (NYSE: GME) and AMC Entertainment Holdings, Inc. (NYSE: AMC) short squeeze pitted retail investors against hedge funds in a battle for dominance that still seems to be ongoing. Last month, retail investors, who had until then enjoyed the upper hand in this saga, were hit as meme stocks - popular among retail investors without probable business-related causes - registered their worst crash in months.

Stocks with high short interest, like Arcimoto, Inc. (NASDAQ: FUV), PubMatic, Inc. (NASDAQ: PUBM), and Beam Global (NASDAQ: BEEM), among others that are discussed in detail below, are often the subject of short squeezes. For context into what these are and examples of the biggest ones in history, go through this piece. In the past few months, short squeezes have resulted in billions of dollars in losses to hedge funds, even leading to the closure of some funds, while returning handsome profits to retail investors who initiated them.

According to a report by IHS Market Research, at the beginning of this year, when the GameStop Corp. (NYSE: GME) and AMC Entertainment Holdings, Inc. (NYSE: AMC) short squeeze was at peak value, the most-shorted companies on the market in terms of short interest outperformed the least-shorted companies by a factor of close to 24% month-to-date, highlighting the rewards that shorted stocks can offer for smart investors who can accurately assess shorted equities and plan accordingly.

The London-based business intelligence firm also revealed that this performance from shorted stocks was the best ever over a period of thirty days since data started being kept, beating the 21% and 15% month-to-date outperformance against least-shorted companies in April 2009 and April 2020 respectively. There is little doubt that high short interest equities have played a huge role in shaping market dynamics this year.

Photo by Dimitris Chapsoulas on Unsplash

The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

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