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November has so far been murderous for investors betting against cyclically-oriented sectors that have been hampered by the spread of coronavirus and social distancing measures.
The pain of short sellers, who use leverage to bet an asset’s value will drop, intensified earlier this week after an optimistic update on a Pfizer PFE vaccine candidate,
and partner BioNTech BNTX,
On Monday, Wall Street rushed into battered stocks like travel and leisure and technology investments.
These moves led to a strong market surge, which particularly benefited small cap stocks and assets considered undervalued by certain parameters.
Indeed, the Russell 2000 RUT index focused on small caps,
is up 5.2% so far this week, pushing it to trade to its first all-time high in about two years, while the high-tech Nasdaq Composite Index COMP,
is down 1.1% so far on the week, despite rallying nearly 2% on Wednesday. This marks the largest margin of outperformance between the Nasdaq Composite and the Russell on record since 1986, according to Dow Jones Market Data.
Meanwhile, value-driven investments outperform growth, those investments that tend to grow earnings and profits faster than others over time, at least briefly breaking a decadal pattern of outperforming growth assets that tend to reside in the technology and internet categories.
Lily: Market rally due to ‘pause’ as rotation from growth to value hits an ‘extreme’
So far this week, the iShares S&P 500 Value ETF IVE,
was up 5.2%, while its growth counterpart, the iShares S&P 500 Growth ETF IVW,
was down 0.3% over the same period.
And momentum-driven trades, bets on stocks that are expected to rise because they have done so in the past, fell 2.4% this week, as measured by the iShares MSCI USA Momentum Factor ETF MTUM,
“Sign of the potential of a post-COVID rotation, [Monday] was the largest one-day gap between the performance of the Momentum and Value factors in the 28-year history of our data, ”Evercore ISI analysts noted in a Tuesday report.
All this seismic movement has led short sellers to record paper losses of around $ 5.5 billion since Nov. 1, according to data provider Ortex Analytics.
Here is a list of the stocks of the companies that they believe have inflicted the most pain on short sellers:
| Business | Profit / loss on short paper $ |
|
Carnival Corporation CCL, |
– $ 520,645,038 |
|
Expedia EXPE Group, |
– $ 382,521,909 |
|
BKNG Holdings Reservation, |
– $ 345,380,994 |
|
Royal Caribbean Group RCL, |
– $ 320,378,441 |
|
Visa Inc. V, |
– $ 316,980,481 |
|
American Airlines AAL, |
– $ 274,828,946 |
|
Wynn Resorts WYNN, |
– $ 253,785,998 |
|
Norwegian Cruise Line Holdings Ltd. NCLH, |
– $ 251,891,345 |
|
Boeing Co. BA, |
– $ 242,611,684 |
|
Walt Disney Co. DIS, |
– $ 236,193,825 |
| Source: Ortex Analytics |
Of course, some transactions have benefited short sellers:
| Business | Short paper profit / loss $ |
|
Zoom Video Communications ZM, |
999 668 $ 166 |
|
Wayfair W, |
936 782 953 |
|
Tesla TSLA, |
460,179,958 $ |
|
Teladoc Health TDOC, |
$ 457,657,390 |
|
Sea Ltd. SE, |
$ 449,411,262 |
|
Alibaba Holding BABA Group, |
$ 448,493,764 |
|
Amazon.com AMZN, |
$ 420,741,075 |
|
Netflix NFLX, |
$ 416,490,778 |
|
Interactive PTON Platoon, |
$ 375,821,804 |
|
Square SQ, |
$ 364,371,882 |
It is still unclear if the rally in value will hold up, tech stocks made a comeback on Wednesday as the Dow Jones Industrial Average DJIA,
and Russell 2000 were both down on the session.
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