15 Nov, 2023

Short sellers boost bets against healthcare stocks

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By Annie Sabater


Short sellers have been increasing their positions against healthcare stocks over much of this year.

At the end of October, short interest in the healthcare sector reached 4.61%, matching the highest level of bets against the sector since July 2022, according to S&P Global Market Intelligence data.

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Short interest in healthcare stocks has risen 61 basis points since the end of 2022 and was 219 basis points higher than overall short interest in the S&P 500 at the end of October. Healthcare is the second-most shorted industry sector, behind only consumer discretionary, which had 5.49% short interest at the end of October, its highest level since mid-June.

Short interest measures the percentage of outstanding shares of a given company or industry held by short sellers, who seek to profit from a stock's decline by borrowing shares to sell at a high price, then repurchasing them after a drop and pocketing the difference.

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Biotechnology, a frequent target of short sellers, was the most shorted subsector within the healthcare space. Short interest in biotechnology stocks ticked up to 5.19% at October-end from 5.13% a month earlier.

Pharmaceuticals, with 4.60% short interest, life sciences tools and services, with short interest of 4.39%, and healthcare facilities, at 3.96%, were the next most shorted subsectors at the end of the October.

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Cassava Sciences Inc. was the most shorted healthcare stock at 37.96% short interest. Cassava Sciences is a clinical stage biotechnology company that develops drugs for neurodegenerative diseases. The company's stock has fallen from a peak of $135.30 per share on July 28, 2021, to a low of $12.64 per share on Oct. 16, 2023.

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Short interest in Cassava Sciences climbed from 33.27% in mid-October to 37.96% at the end of the month, making it the third-most shorted stock.

Beyond Meat Inc. was the most shorted stock at the end of October, at 41.28% of outstanding shares being shorted, followed by Fisker Inc. with 40.84% short interest.