Short positions against the so-called FAANG group of the largest U.S. technology stocks have surged by more than 40% in the past year as investors bet against some of the biggest drivers of the global bull market.
Bearish investors have shorted about $37 billion worth of stocks in the group, which comprises Facebook Inc., Apple Inc., Amazon.com Inc., Netflix Inc. and Google parent Alphabet Inc., up 42% from a year ago. Amazon leads the way with almost $10 billion in short interest, according to data compiled by Bloomberg as of Aug. 28 from financial analytics firm S3 Partners LLC.
“Tech stocks have had a large run-up in price this year,” Ihor Dusaniwsky, head of research at S3 Partners, said in an email. “The greater the rise, the greater the fall so they are being targeted as the stocks to short. With the bull market possibly entering the backstretch, portfolio managers are bracing for a selloff and increasing their overall market short exposure.”
Investors are piling into FAANG shorts as U.S. stocks continue to breach new records, with the Nasdaq Composite Index surging above 8,000 for the first time Tuesday. The group has accounted for 48% of the index’s advance this year, according to data compiled by Bloomberg.
Tech companies overall make up half of the 10 largest short-interest positions in the world, with Chinese e-commerce giant Alibaba Group Holding Ltd. at the top of the list with almost $19 billion worth of stocks short. That is more than double the 19% weighting the sector has in the MSCI All-Country World Index of the world’s largest developed and developing market stocks…