Tesla listed as ‘most crowded’ short position among U.S. securities: Hazeltree

Tesla stock (NASDAQ: TSLA) was the most crowded large capitalization security in terms of being shorted, according to Hazeltree’s analysis of short-sided stocks for January.

Tesla has long had a reputation for being a popular stock to short. Shorting a stock means that a seller borrows shares, usually from a broker-dealer, hoping to buy them back for a profit, meaning the price per share must decline.

Notable short sellers on Tesla stock include David Einhorn, Jim Chanos, and even Bill Gates, to name a few. Both of these analysts have been vocal about their positions against Tesla in the past.

Longtime Tesla short-seller bets against stock again despite low short interest

For a short while, Tesla stock was not the most-shorted stock. The company’s climb up from 2019-2022 made millionaires as investors who got in early tasted a steep incline thanks to automotive growth, a robust energy division, and the development of AI. Short-sellers were burned and lost billions.

Many ditched their positions altogether.

50% of Tesla short sellers have ditched their positions

However, Tesla stock is not a growth guarantee like it seemed to be for a few years. Instead, it has suffered slightly over the past few years, dealing with an increase in competition and what some believe is a lack of focus from CEO Elon Musk, who bought Twitter and turned it into X.

Some investors feel Musk’s focus is more on social media and less on Tesla.

For long-term investors, Tesla is still a massive contributor to their portfolio’s growth. Over the past five years, Tesla stock is up over 800 percent. The past two years have seen a roughly 35 percent decrease. Over the past year, it is down 11 percent.

There are still a lot of catalysts for Tesla’s growth, but the stock may be back to its status as a suitable option for short sellers.

Hazeltree, a treasury and liquidity management platform for alternative asset managers, released its January report today, and Tesla was atop the list of large-cap shorting crowdedness for the month with a 99 rating, the highest possible.

The platform’s rating scale is described within the report:

“This score represents securities that are being shorted by the highest percentage of funds in Hazeltree’s community in a pre-defined category. The securities are graded on a scale of 1-99, with 99 representing the security that the highest percentage of funds are shorting.”

Tesla has a 99 crowdedness score, with a 2.12 percent institutional supply utilization.

Institutional supply utilization is described as:

“This figure represents the percentage of the institutional investors’ supply of a particular security that is being lent out. The institutional supply utilization rate is an indicator of how “hot” a security is in terms of the supply-demand dynamic. It is possible to see 100% utilization of a security’s availability making it difficult to establish new short positions.”

Tesla shortly lost its spot as the most crowded security in October, as Hazeltree listed ExxonMobil Corp as the stock with the most short crowdedness.

ExxonMobil now is third with a score of 84, while Chevron is second with a score of 94.

Disclosure: Joey Klender is a TSLA Shareholder.

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