The latest data from Goldman Sachs Prime showed that last Friday (3rd) US hedge funds’ short covering scale was the largest since November 2015, surpassing the retail frenzy in January 2021. Among them, Carvana (CVNA -US), which is heavily shorted by Wall Street institutions, ), the share price has risen more than 200% this year, showing signs that American retail investors are “sniping” Wall Street shorts.
The Goldman Sachs report also showed that quantitative hedge funds lost about 1.3% on February 2, the worst day in more than six months. US software stocks rose sharply as hedge funds continued to cover short positions.
The reason is that US retail investors are frantically buying US tech stocks, especially stocks that have been short-sold by hedge funds.
According to the latest JP Morgan Chase census results, at the end of January, stock and ETF trading orders from the army of retail investors accounted for 23% of the total market turnover, even higher than the historical record (22%) set by the surge. of retail investors in 2021. .
Signs of US retail investors “squeezing short hedge funds” are more pronounced in individual stocks. Take Carvana, an American used car e-commerce platform, as an example, which was heavily shorted by Wall Street institutions. According to data from IHS Markit, institutions have short positions in Carvana, accounting for nearly 60% of shares outstanding at one point, and it is the stock with the highest rate of shorting among all stocks Russell 1000 Index.
Since the beginning of this year, retail investors in the United States have been buying Carvana wildly, driving Carvana’s share price to soar by more than 200% this year, making it the biggest gainer in the Russell 1000 Index.
It can be seen that American retail investors are trying to “cluster together” to squeeze out Wall Street institutions. Currently, over 266,000 call contracts are changing hands on Carvana, the second highest amount ever.
It is worth noting that Carvana’s fundamentals have not changed in any way, and it is even facing a huge debt crisis and is on the verge of bankruptcy. Its financial report shows that the loss in the third quarter of last year amounted to 508 million US dollars. Analysts expect Carvana to run out of cash as soon as the first quarter of this year if there is no capital injection.
In addition, the stock price of AMC (AMC-US), the former darling of retail investors in the United States, has risen more than 50% this year. Currently, the company’s short holdings account for 29%; Wayfair (W -US), an e-commerce supplier of furniture and home goods, It has also risen more than 104% this year.
