We recently gathered all of the ETFs from our ETF Trends report and calculated their short interest as a percentage of their current shares outstanding. Many investors look for stocks with high short interest because good news usually sends shares soaring due to short covering. Oddly, a number of ETFs that we track have much higher levels of short interest than their reported shares outstanding. This seems to be due to "multiple borrowings" according to Morgan Stanley.
Below is a list of the most heavily shorted ETFs based on short interest as a percentage of shares outstanding. As shown, reported numbers indicate that more than three times the number of shares outstanding are short for RTH, the retail group ETF. KCE, USO, IWM, IYR, OIH and IAI are other ETFs whose numbers suggest that more shares are shorted than shares outstanding.
The next time the market rallies sharply, look for these ETFs to do well.
Subscribe to Bespoke Premium to receive more in-depth research from Bespoke.