Benzinga: Wall Street hedge funds are shorting US stocks and ETFs, with total leverage reaching a historic high.

Hedging funds increased short positions in stock futures by $25 billion (Short Equity Futures), marking the largest increase in over a decade within three weeks. With the surge in short positions for ETFs and individual stocks, the total leverage ratio has reached an all-time high.

Since April, the S&P 500 index has rebounded significantly by 23%, but due to investors questioning whether the rebound from tariff reductions can be sustained, hedge funds are currently increasing their short positions in the stock market, with the number reaching record levels.

In the past three Commitments of Traders (COT) reports, hedge funds increased their short positions in stock futures by $25 billion, marking the largest increase in three weeks in a decade.

Wall Street analysts: The public remains skeptical about the short-term recovery from the suspension of tariff sanctions.

Goldman Sachs analyst Ben Snider stated that the total gross leverage, including both long and short positions, (Gross Leverage), has risen to historical highs. Although the net leverage (longs minus shorts) remains below February levels, the accelerated growth of short positions has changed the market landscape. This surge highlights the increasing skepticism about the market's resilience to a V-shaped recovery after the tariff sell-off.

Steno Research analyst Oskar Vårdal stated that as economic growth and inflation begin to accelerate again, hedge funds and Commodity Trading Advisors (CTA) continue to counter the cycle, doubling down on long-term bonds and short positions.

Which short positions are hedge funds targeting?

The goals of hedge funds include ETFs traded on exchanges, as well as individual stocks. Data from Goldman Sachs ( shows that in the second quarter, short positions in ETFs reached $218 billion, and short positions in individual stocks reached $948 billion, with the short selling volume of U.S. ETFs in April showing the largest growth.

Among the ETFs listed in the United States, the SPDR S&P Regional Banking ETF has seen its short positions surge by 50 percentage points since mid-February, currently accounting for 96% of the outstanding shares. The SPDR S&P Biotech ETF has risen by 27 points to 111%, while the iShares Russell 2000 ETF has climbed to 33%.

The highest short positions in history for ETFs include the VanEck Gold Miners ETF, which accounts for 12% of the circulating shares, the First Trust NASDAQ-100 Tech ETF at 4%, and the iShares Core S&P Mid-Cap ETF with a short selling amount of 1 billion USD.

Hedging interest in consumer staples has surged on Wall Street.

Wall Street's interest in short positions includes sectors such as consumer staples, utilities, and healthcare, currently accounting for one-fifth of the top five. The median short positions in the S&P 500 Index account for 2.3% of market value, while the short interest in the financial and information technology sectors is below the long-term average.

Which US stocks have become the most targeted for short positions?

U.S. stocks with the biggest gains in short positions since the February peak include Somnigroup )NYSE SGI(, Lucid Group Inc )Nasdaq LCID(, Amer Sports Inc. )NYSE codename AS(, Medpace Holdings Inc )Nasdaq codename MEDP( Moderna (Nasdaq codename MRNA), First Solar Inc. )Nasdaq code: FSLR(

Pure market observation, not any investment advice.

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