US stock short sellers down USD 145 billion in 2023 – Ortex

NEW YORK, Dec 15 – A late-year surge in stocks is exacerbating the pain of short-sellers, who are on track for their worst collective annual loss since 2020, according to data and analytics company Ortex.

Short sellers – who aim to profit by selling borrowed shares and buying them back later at a lower price – are down over USD 145 billion for the year, according to an Ortex analysis of short interest in 1,500 US stocks.

The losses have come in the face of a rally that has ramped up in the fourth quarter on expectations that the US Federal Reserve is done raising interest rates and will likely pivot to cuts next year. The index is up 22.9% year-to-date and around 2% away from a record high.

“2023 has seen huge losses for short sellers,” said Peter Hillerberg, co-founder of Ortex, said.

Short interest rose by USD 9.8 billion for the year, suggesting that investors were reluctant to double down in their bearish bets, Hillerberg said.

By contrast, short interest rose by USD 95.84 billion in 2020, when short sellers racked up USD 182.65 billion in losses, Ortex data showed.

Short interest has stayed roughly consistent throughout the year, Ortex data showed. The unweighted average short interest as a percentage of free float on the stocks tracked by the firm stands at 4.75%. That is toward the higher end of this year’s range of 4% to 4.75%.

On Friday, the S&P 500 finished about flat on the day but up 2.3% for the week, its seventh straight weekly gain, the longest such streak in six years.

(Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Josie Kao)