The “meh” 2024 short squeeze

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When Roaring Kitty made a sudden, possibly faked and definitely spammy, comeback on social media, it sparked a surge in stocks of GameStop and adjacent 2021-era meme stocks, and excitement that another massive wave of destructive hedge fund short squeezes was underway.

This time – or so the true believers hope – it could even be the mythical “REAL” short squeeze that will ruin all the hedge funds, overthrow the entire global financial system and make the monkeys fabulously rich. of diamonds.

As Bryce noted at the time, some short positions in GameStop were eliminated, but this was not a redux for 2021. In fact, the overall squeeze in short positions in U.S. stocks was notable , but it is not even comparable to those that occurred during other major market reversals like December 2023 and April 2020.

Goldman Sachs’ basket of stocks most shorted by hedge funds has jumped 25 percent in recent weeks, turning a 10 percent year-to-date loss through April into a gain by 7 percent. But compared to the 2021 earthquake, this is only a minor tremor.

Additionally, thanks to the performance of popular long positions such as Nvidia, Meta and TSMC, hedge funds are generally doing well, with the US long-short equity hedge fund up 8% year to date, according to estimates from prime brokerage firm Goldman. Here’s how Goldman’s “VIP” index of popular hedge fund long positions performed against the equal-weighted S&P 500 and a basket of the most popular short positions:

Importantly, for all the online furor, short sellers of individual stocks seem to be following the same path as switchboard operators, town criers and broom owners.

OK, that’s a slight exaggeration, but, as FTAV has already pointed out, there is much less of it, with most short selling moving away from individual stocks and toward index-level hedging .

Median short interest for S&P 500 companies has recovered slightly lately, but remains near historic lows, and for the U.S. stock market as a whole, it is negligible:

Maybe we’ll see a little more action in the coming weeks, but there just isn’t enough kindling to light the kind of short hell we saw at the start of 2021. That doesn’t will not stop the “superstonkers”.

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