Heavily shorted stocks like Plug Power, RIOT Blockchain surge as US inflation eases

It’s a big ole short squeeze out there.

A basket of US companies that traders love to hate was up 4.3% Wednesday morning. That would be its biggest one-day gain since May 30 if the increase holds.

Noteworthy companies in the Russell 3000 with short interest above 20% of their equity float include AMC, MARA Holdings, Plug Power, Riot Platforms, Lemonade_, SoundHound AI, and ChargePoint.

You might notice that GameStop is not part of this list. That is because, contrary to popular belief, GameStop is not a heavily shorted stock (though it is putting on a solid showing today).

Stocks and bonds are surging after US CPI was softer than anticipated in December. The thinking here may go that struggling companies stand to benefit the most from this development, as the vulnerabilities that skeptical investors envisage may diminish in a world where borrowing conditions improve and recession risk eases.

Just one week ago, this cohort was getting smashed.

Their gains look like pain for the macro-investing community, which has been stepping up its bets against stocks — especially via exchange-traded funds.

“Current macro discretionary equity short position is elevated at Goldman Sachs Prime Brokerage,” wrote Scott Rubner, managing director for global markets. “ETF shorts are up +24% in the past month (the fastest pace since February 2021, i.e. the meme stock).”