ETFs with the Largest Short Interest

We recently gathered all of the ETFs from our ETF Trends report and calculated their short interest as a percentage of their current shares outstanding.  Many investors look for stocks with high short interest because good news usually sends shares soaring due to short covering.  Oddly, a number of ETFs that we track have much higher levels of short interest than their reported shares outstanding.  This seems to be due to "multiple borrowings" according to Morgan Stanley.

Below is a list of the most heavily shorted ETFs based on short interest as a percentage of shares outstanding.  As shown, reported numbers indicate that more than three times the number of shares outstanding are short for RTH, the retail group ETF.  KCE, USO, IWM, IYR, OIH and IAI are other ETFs whose numbers suggest that more shares are shorted than shares outstanding. 

The next time the market rallies sharply, look for these ETFs to do well.   

click to enlarge

Comments

[haydete:]

IYR is real estate, not financials. Based on the share price, it "should" be IYR real estate.

2008 Feb 24 06:31 PM

[Valueplay98:]

Naked short selling is fraud and it will take another 1929 event to get the SEC off their butts and enforce the laws that were created in 1934 to prevent this illegal activity.

2008 Feb 26 07:25 AM