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Sept. 19, 2022, 10:04 a.m. EDT

Apple is now the market’s most shorted stock. If Tesla is an example, that’s bullish.

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By Mark Hulbert

Apple shareholders need not worry that it’s the most-shorted U.S. stock. I’m referring to the report from short-seller analytics firm S3 Partners that, after 864 days in which Tesla /zigman2/quotes/203558040/lastsale TSLA -0.19% was at the top of this list, Apple /zigman2/quotes/202934861/composite AAPL -1.96% has acquired this dubious honor. As of Sept. 14, a total of $18.4 billion worth of Apple shares were sold short, eclipsing Tesla’s total of $17.4 billion. That certainly seems like a lot of money aggressively betting that Apple’s stock will fall.

Perhaps the first clue that Apple investors nevertheless need not worry comes from Tesla’s market-beating performance even though it topped the most-shorted list. Since April 2020 through Sept. 14, the stock produced a total return of more than 100% annualized, according to FactSet, versus 15% for the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.03% . Apple investors can only hope they outperform the market by as much during the time the company is the most-shorted.

Tesla is just one data point, of course. The better reason for Apple investors not to worry is that the sheer dollar amount of shares sold short is “pretty meaningless,” Jay Ritter told me in an email. Ritter is a finance professor at the University of Florida and co-author of one of the more cited academic studies on the investment implications of short interest . He added that he is not currently short Apple but is short Tesla.

In order for the short-interest data to be meaningful, it must be put in context. A large dollar amount of Apple shares may be sold short, but the company also has the largest market cap of any publicly traded company in the world. Among the more relevant short-selling metrics are the short-interest percentage (the number of shares sold short expressed as a percentage of the total number of shares outstanding) and the days-to-cover ratio (the number of shares sold short divided by average recent daily trading volume).

According to either of these two ratios, Apple is actually one of the least-shorted stocks. According to FactSet, in terms of the short-interest ratio Apple ranks in 477 place among the 500 stocks within the S&P 500. In terms of the days-to-cover ratio, it ranks in 463 place. In other words, what the headlines trumpeted as one thing is in fact precisely the opposite.

Might heavy shorting be bullish?

Some contrarians may be disappointed to learn that Apple’s short-interest rank is so low. That’s because they believe that high levels of shorting are actually bullish.

The problem with this contrarian argument is that it’s wrong, according to Adam Reed, a finance professor at the University of North Carolina who is one of academia’s leading experts on the significance of the short-sale data. In an email, he told me that the strong consensus conclusion of numerous academic studies is that stocks proceed, on average, to underperform the market if they have high short-interest ratios.

He added that he is not aware of any academic research that has found the sheer dollar value of shares sold short to be correlated in any meaningful way with a stock’s subsequent performance.

The bottom line? Apple’s newly-attained first-place ranking in the most-shorted list is a lot of sound and fury, signifying nothing.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at

More: These 20 stocks have short interest of 19% or more, and AMC and GameStop are not even in the top half

/zigman2/quotes/203558040/lastsale
US : U.S.: Nasdaq
$ 182.86
-0.34 -0.19%
Volume: 50.67M
Nov. 25, 2022 1:00p
P/E Ratio
56.50
Dividend Yield
N/A
Market Cap
$577.43 billion
Rev. per Employee
$753,983
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/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 148.11
-2.96 -1.96%
Volume: 35.20M
Nov. 25, 2022 1:00p
P/E Ratio
24.27
Dividend Yield
0.62%
Market Cap
$2356.15 billion
Rev. per Employee
$2.40M
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
4,026.12
-1.14 -0.03%
Volume: 0.00
Nov. 25, 2022 2:32p
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About Mark Hulbert

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Mark Hulbert is editor of the Hulbert Financial Digest, which since 1980 has been tracking the performance of hundreds of investment advisors. The HFD...

Mark Hulbert is editor of the Hulbert Financial Digest, which since 1980 has been tracking the performance of hundreds of investment advisors. The HFD became a service of MarketWatch in April 2002. In addition to being a Senior Columnist for MarketWatch, Hulbert writes a monthly column for Barron’s.com and a column on investment strategies for the Journal of the American Association of Individual Investors. A frequent guest on television and radio shows, you may have seen Hulbert on CNBC, Wall Street Week, or ABC’s World News This Morning. Most recently, Dow Jones and MarketWatch launched a new weekly newsletter based on Hulbert's research, entitled Hulbert on Markets: What’s Working Now.

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