A terrible year for most investors in the stock market was one to celebrate for traders who bet successfully on its decline.
U.S. short sellers were up 31% in 2022, sitting on $300 billion in mark-to-market profits on an average short interest of $973 billion, research from data analytics firm S3 Partners showed Wednesday.
These winnings came as equity markets closed out their worst run since the Global Financial Crisis more than a decade ago.
The S&P 500 tumbled 19.4% in 2022, the Dow fell 9%, and the Nasdaq Composite dropped 33%. For the first time since 2000, the Nasdaq fell during each quarter of the year.
The major indexes also snapped a three-year winning streak in 2022, battered by aggressive monetary tightening by the Federal Reserve to tame stubborn inflation and Russia’s war in Ukraine.
Short-side returns outperformed the long returns of the S&P 500 and broader Russell 3000, according to S3. But shorts slightly underperformed the technology-heavy Nasdaq Composite as it weathered the brunt of last year’s selling pressures, meaning market gains realized by investors betting against the Nasdaq would've been more than wiped out by the index's decline.
“Short sellers still needed to be good stock pickers in order to maximize their returns,” S3’s Ihor Dusaniwsky said in a note. “Even on a more macro level, picking which sectors to short produced wildly divergent returns.”
Communications Services and Consumer Discretionary were the most profitable sectors for short-sellers, earning traders an average return of 50%. The two components of the S&P 500 led declines among the other nine sectors, logging losses of 37.7% and 36.2%, respectively, in 2022.
Meanwhile, the average short-seller in Energy was down 28% for the year as the sector notched a 64.6% gain, the only one of two with positive returns along with utilities.
Big names like Facebook parent Meta (META), Alphabet (GOOG, GOOGL), Netflix (NFLX), and AMC Entertainment (AMC) were among the most profitable shorts in the Communications Services sector. In 2022, for long investors, Meta shed 64%, Alphabet fell 39%, Netflix lost 51%, and AMC dropped 86%, respectively.
Short-sellers, however, made $5.5 billion in mark-to-market profits on Meta's drop, $2.7 billion on Alphabet's plunge, $2.3 billion on Netflix's decline, and $2.1 billion on AMC's plunge.
Within Consumer Discretionary, headliners like Tesla (TSLA), Carvana (CVNA), Amazon (AMZN), and Rivian Automotive (RIVN) were money makers for short sellers.
Tesla closed out its worst year on record in 2022, shedding 65%, or about $700 billion in market value over concerns around supply and demand and CEO Elon Musk’s management of Twitter. Carvana had an epic drop of nearly 100%, and Amazon and Rivian each fell 50% and 81% in 2022.
In 2022, Tesla was the most profitable and largest average U.S. short, earning traders who bet against the company $15.8 billion in mark-to-market profits.
CEO Elon Musk's take-private deal to buy Twitter, on the contrary, clobbered short-sellers with a 37% mark-to-market loss, S3 Partners said.
—
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
Click here for the latest trending stock tickers of the Yahoo Finance platform
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
Waddell and Associates CEO and Chief Investment Strategist David Waddell and Providence Financial & Insurance Services President Anthony Saccaro join Yahoo Finance Live to discuss how Fed policy and interest rate hikes have impacted the markets, inflation, and the labor market.
Linde's (LIN) subsidiaries and ventures in Russia will be prevented from divesting or disposing of their assets.
Alpine Income's (PINE) acquisition of properties with investment-grade tenants and a long lease term will enable it to enjoy recurring revenues over the lease term.
(Bloomberg) — A veteran trader’s well-timed bet on the end of easy money has achieved triple-digit returns in his new hedge fund’s first full year. Most Read from BloombergWhat We Know About the ‘Kraken’ Covid Variant XBB.1.5 and Why It’s Causing ConcernIf You Have Student Loans, Mark These Dates on Your CalendarUkraine Latest: US and Germany to Send Their Armored VehiclesWhy Conservatives Are Blocking McCarthy as Speaker — and Throwing Congress Into ChaosAmazon to Slash More Than 18,000 Jobs i
“The idea in your head that you can quietly hide in your ivory tower and that this will all just magically go away, or that this is someone else’s problem, is pure fantasy,” Cameron Winklevoss wrote to former friend Barry Silbert.
ZIM (ZIM) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock's prospects.
Yahoo Finance Live’s Brian Sozzi discusses a Morgan Stanley analyst’s defense against Apple stock.
Apart from the distribution hike, Enterprise Products (EPD) is also repurchasing shares for returning capital to unit holders.
As CES 2023 draws to a close this weekend much of the attention in the chip world was lauded on companies like Advanced Micro Devices Inc. and Nvidia Corp. but a lower profile chip maker appears better positioned coming out of the convention.
Dividend stocks are the Swiss army knives of the stock market. When dividend stocks go up, you make money. When they don’t go up — you still make money (from the dividend). Heck, even when a dividend stock goes down in price, it’s not all bad news, because the dividend yield (the absolute dividend amount, divided by the stock price) gets richer the more the stock falls in price. Knowing all this, wouldn’t you like to own find great dividend stocks? Of course you would! Using the TipRanks platfor
When Rivian Automotive (NASDAQ: RIVN) went public in November 2021, it claimed it could produce 50,000 electric vehicles (EVs) in 2022. But last March it halved that target to 25,000 amid persistent supply chain constraints.
The tech industry has long been known for its wealth of growth stocks, making the start of 2023 an excellent time to pick some up for a bargain. Apple (NASDAQ: AAPL) and Nvidia (NASDAQ: NVDA) have experienced steep stock declines over the last year. Here are two growth stocks to buy hand over fist in 2023 after last year's tech sell-off.
Geron, Chemomab Therapeutics, Phathom Pharmaceuticals, Vera Therapeutics and Novavax are included in this Analyst Blog.
The disgraced crypto founder, once worth $26.5 billion, said he only has $100,000 in his bank account.
The billionaire investor tells TheStreet that a new scandal will soon rock the cryptocurrency industry.
Analysts say minutes of the Federal Reserve's December meeting delivered an important message to investors: big stock market rallies are unwelcome.
Shares of Costco are moving higher after the company beat Wall Street expectations for holiday sales in December.
Shares of Aurinia Pharmaceuticals (NASDAQ: AUPH) were up by 79.6% this week as of late Friday afternoon, according to data provided by S&P Global Market Intelligence. The biopharmaceutical company, which specializes in treating autoimmune disorders, closed last Friday at $4.32, then rose to as high as $7.80 in the early afternoon this Friday. Aurinia reported full-year revenue of $134 million, up 112% over 2021.
Warren Buffett and his conglomerate Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) spent more money buying stocks in 2022 than they did in any other year of the 21st century (and maybe ever), according to filings from the Securities and Exchange Commission. While we won't know the final tally for the year until the fourth-quarter numbers are published, through the first three quarters, Berkshire Hathaway spent over $66 billion on equities. Interestingly, Berkshire Hathaway did the large majority of its buying early in the year, purchasing more than $51 billion of stocks in the first quarter.
At uncertain times like these, it's a good time to consult the wisdom of great investors like Warren Buffett, who was active in the market the last time inflation was this high, in the early 1980s. Back then, in his 1982 letter to shareholders, Buffett noted that businesses that outperform in inflationary environments have two qualities. First, they have pricing power, or an ability to raise prices without significant loss of market share or unit volume, as Buffett put it.
