After a Judicial Committee Anti-Trust Panel hearing where mega-tech CEO’s Jeff Bezos of Amazon.com Inc (AMZN), Tim Cook of Apple Inc (AAPL), Sundar Pichai of Alphabet Inc (GOOG, GOOGL) and Mark Zuckerberg of Facebook Inc (FB) were grilled for several hours on a myriad of topics from anti-competitive practices to protection of personal information they will now face investor scrutiny of their 2nd quarter earnings. These are some of the most shorted stocks in the U.S. market and used as an overall portfolio Beta hedge and straight out Alpha generator.
There was $24 billion of short covering in U.S. stocks over the last month but only FB of the big four, with $507 million of short covering, saw its shorting activity curtailed. APPL, AMZN and GOOG\GOOGL had $1.25 billion of additional short selling while in general most shorts were covering some of their exposure. There was a change in short sentiment for these four stocks as we saw $2.45 billion worth of short selling in the first three weeks of the month versus $1.70 billion worth of short covering in the last week of the month. Short sellers actively covered some of their APPL\AMZN\FB\GOOG\GOOGL exposure ahead of the hearing and earnings releases.
Looking at these four stocks versus their sector brethren we see that, as expected, they are the most shorted stocks in each respective sector, but their short selling activity is not necessarily representative of the rest of the stocks in the sector.
AMZN barely ekes out the top spot in the Internet & Direct Marketing Retail sector by beating out Alibaba Group ADR (BABA) by only $67 million in short interest. AMZN short sellers had the most complete “about-face” in activity, shorting $614 million worth of stock in the first three weeks of the month and liquidating nearly all of that activity, $537 million, over the last week. BABA continued to be a short target throughout the entire month with $1.22 billion of early month short selling followed by $40 million of short selling over the last week. Chinese internet retail stocks were the focus of short selling throughout the month with Pinduoduo Inc ADR (PDD) and JD.com Inc ADR (JD) also seeing month long short selling. Like AMZN, Wayfair Inc (W) also saw early short selling turn into short covering.
In the Technology, Hardware, Storage & Peripherals Sector AAPL is by far the largest short with 73% of the total short interest in the sector. Heavy short AAPL short selling of $1.45 billion in the first three weeks of the month was followed by $378 worth of short covering over the last week. Another reversal of short sentiment was Logitech Intl (LOGI) where $188 million worth of early short selling stalled over the last week when we saw $8 million worth of short covering. Finally, Eastman Kodak Co (KODK) had a tsunami of short covering with $211 million of buy-to-covers over the last week as its stock price rallied on news of the firm expanding its pharmaceutical business line with the help of federal loans under the Defense Protection Act. KODK short sellers covered 44% of their short exposure over the last week.
FB and GOOG\GOOGL hold the top 3 spots in the Interactive Media & Services Sector and make up 54% of the total short interest in the sector. FB short covering continued to be strong throughout the month while GOOG\GOOGL had $652 million of short selling in the first three weeks of the month followed by $544 of short covering over the last week. Following the trend, we saw in BABA and JD, Tencent Holdings ADR (TCEHY) had continued short selling throughout the month while Baidu Inc ADR’s (BIDU) short selling stalled over the last week of the month. While most stocks in the sector like FB, GOOG\GOOGL, Snap Inc (SNAP) and Twitter Inc (TWTR) finished off the month with short covering, Zillow Group (Z) bucked the trend and had early month short covering turn into a bit of short selling.
With AAPL\AMZN\FB\GOOG\GOOGL short sellers covering a portion of their exposure over the last week we may be looking at positive 2nd quarter earnings results for these tech behemoths. With all four companies all up today after yesterday’s anti-trust hearing, strong earnings results should push short sellers to continue their short-covering trend.
Looking at short selling trends over time provides insight into overall market sentiment as well as the strength of bearish conviction in individual equities. Our Blacklight SaaS platform and Black APP provides an up to date view of short selling and short covering on an equity, sector, index, or country-wide basis allowing investors\traders to better manage their existing long and short positions.
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