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Nov 27, 2017

S3 Analytics: Tech Short Exposure up $8.1 Billion Over last Month

Overall, short interest in the Tech Sector is up 28% on the year, up $31.6 billion, bringing total short interest to $143.0 billion.

The largest increases in short exposure were in the Application Software and Semiconductor Sectors which were up $5.2 billion and $4.6 billion, respectively. Companies such as Salesforce.com, Workday Inc., Snap and Splunk were the big shorts in the Application Software Sector and Intel, Microchip Tech, Micron Tech and Nvidia were the big short movers in Semiconductor Sector.

The Technology Select Spider ETF (XLK) also saw a significant increase of short selling with short balances increasing by $807 million, or 64% in 2017. XLK short interest is now $2.07 billion.

Over the last month, pre year-end short selling has begun with overall short interest in the sector increasing by $8.1 billion. Both the Internet Software & services Sector and Semiconductor Sector are the most shorted sectors in the last month, with each up $2 billion.
The largest shorts in the Tech Sector are still the usual suspects, with the larger cap well-known securities at the head of the league table. Twenty-one out of the top twenty-five Tech shorts saw their short interest increase over the last month.

Just because short interest in the sector continues to climb the increased short activity has not necessarily translated into profitable trades. With the Tech Sector rallying all year long, losers on the short side outnumbered winners, and average losses by security were much larger than gains.

We should see continued short selling in the Tech Sector, either as part of an overall beta hedging strategy or outright short alpha bets.

Want deeper insight into the above analysis? Contact:
Managing Director Predictive Analytics, S3 Partners, LLC
The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.

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