Short Sellers Pour Into FAANG Stocks

Five of the hottest growth stocks of the bull market, Facebook Inc FB, Amazon.com, Inc. AMZN, Apple Inc. AAPL, Netflix, Inc. NFLX and Alphabet Inc GOOG GOOGL, have shown no signs of slowing down so far in 2017. However, short sellers seem to see the writing on the wall and have been quietly piling into the so-called FAANG stocks in droves in recent weeks.

According to the latest numbers from financial analytics firm S3 Partners, short sellers increased their net positions in the five FAANG stocks by $1.93 billion, a 7.6-percent increase, over the six weeks ending on Sept. 28.

The latest positions bring the total outstanding short interest on the five stocks to $27.3 billion.

Of the five names, Netflix has been the hottest stock among short sellers, with a $910 million uptick in short interest in six weeks. Apple maintains the overall edge in total short interest with an outstanding short position of more than $6.3 billion.

Short-seller losses of more than half a billion dollars on their positions in Netflix and both classes of Alphabet shares since Aug. 15. However, their losses have been mitigated by a $510 million gain on Facebook, Amazon and Apple short stakes.

With these five stocks still among the most popular long plays in the market, analyst Brett Weiss says short sellers can continue placing their bets on the cheap.

“All of these companies continue to trade at general collateral levels, the cheapest fee or easiest to borrow stocks,” Weiss said.

Only time will tell whether these FAANG bears believe the growth rally has run its course or if they are simply hedging market bets with the S&P 500 trading at all-time highs.

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