Short sellers: downside speculation less profitable since Wirecard

Posted on Oct 22, 2020 at 4:54 p.m.Updated Oct 22, 2020 5:33 PM

After peaking in activity between March and May, short sellers, who bet on falling stocks, have been less active this summer. They ran 44 campaigns, half of which in two sectors (technology and healthcare) against companies listed in the third quarter according to BreakoutPOINT. 26 (60%) targeted US companies resulting in an average share drop of 4%. Stocks targeted in all countries by short sellers fell 2% and down from 31% in the first quarter, a period of great tension in the markets with the COVID-19 crisis.

Short sellers, who make money when stocks fall, have faced a “Headwind”, rising markets and more optimistic investors about the global economic recovery. In the third quarter, the Standard & Poors 500 index gained 8.5% and the Nasdaq technology market 11%. In July, the advance of groups like Tesla (+ 32%), Amazon, Alphabet and Advanced Micro Devices (semiconductors) caused heavy losses to hedge funds who had bet on their decline. They lost around $ 6 billion, including $ 4 billion on Tesla, according to Ortex Analytics.

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