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Short interest figures as of mid-April were released on Friday after the close and showed an overall decrease in short interest for NYSE and Nasdaq listed stocks. In the chart below, we show the average short interest as a percentage of float for S&P 500 stocks. After peaking at 5.6% in mid-March, short interest as of mid-April has now declined to 5.5% of the average stock's float.

At first glance, it is somewhat surprising that short interest has only declined by a marginal amount. Given the 25%+ rally in the S&P 500, one would expect to see short interest decline by a much larger amount. Digging into these numbers, however, the headline short interest numbers are somewhat misleading due to the extraordinarily large short interest in Citigroup (NYSE:C). Due to the arbitrage taking place over the upcoming conversion of the preferred into common shares, Citi's short interest represents 12.1% of the total short interest for the S&P 500 . If one were to back Citi out of the calculations, short interest would be about 5.4% of the average stock's float.

Even though short interest has declined, there are still plenty of stocks investors are heavily betting against. For example, 82 stocks in the S&P 500 currently have over 10% of their float sold short, and 12 have more than 20% shorted (highlighted below). Given the state of the Financials, one would think most of the names would come from that sector, but the reality is that Citigroup (C) and Avalon (NYSE:AVB) are the only two names from that sector to make the list. The Consumer Discretionary sector is currently the most popular on the 'least popular' list (more than 20% sold short), as six of the 12 names are from the sector.