Short sellers further pared back their bets against communication services stocks through the middle of March.

Short interest in the communication services sector was at 3.46%, a drop of 17 basis points (bps) from the end of February and down about 214 bps from the most recent peak in July 2022, according to the latest S&P Global Market Intelligence data.

Since the start of 2023, the S&P 500's communication services sector has rallied more than 15.7%, compared to the overall S&P 500, which has rallied about 5.3%.

Consumer discretionary remained the most-shorted sector as of mid-March, with 5.78% short interest, as sellers continued to bet that persistently high inflation would erode demand. Short interest, which measures the percentage of outstanding shares held by short sellers, was at 2.35% for the overall S&P 500 as of mid-March, up from 2.26% at the end of February.

Communication services breakdown

Within the communication services sector, alternative carriers were the most shorted, with short interest of 6.38% at mid-March, followed by cable and satellite stocks, with short interest of 5.49%.

AMC Entertainment Holdings Inc. was the most-shorted communication services stock as of mid-March, at 24.5% short interest. Cinemark Holdings Inc. and World Wrestling Entertainment Inc. were the second- and third-most shorted, with short interests of 21.5% and 20.9%, respectively.

Most-shorted overall

Across all sectors, Bed Bath & Beyond Inc. was the most-shorted stock on major US exchanges as of mid-March with 70.48% short interest, down 20 bps from the end of February.

Silvergate Capital Corp. was the second most-shorted stock, with 62.83% short interest, but down from 66.82% at the end of February. Amid turmoil in the banking sector, short interest in financials increased just 8 bps from 1.49% at the end of February to 1.57% as of mid-March.

Financials remained the least-shorted sector.