In recent years, investors increasingly use exchange-traded funds (ETFs) on the short end of their portfolio. Shorting these funds provides an easy way to hedge a portfolio managers’ position in individual stocks. Yet some ETFs with high short interest are simply the target of speculators that are anticipating a big decline for an industry or asset class. When this happens, the short interest can grow to alarming levels. For individual investors that are able to wait out near-term bears and focus on the long-term, it can mean a strong upside when sentiment turns. The Market Loves To Hate Oil… Read More
In recent years, investors increasingly use exchange-traded funds (ETFs) on the short end of their portfolio. Shorting these funds provides an easy way to hedge a portfolio managers’ position in individual stocks. Yet some ETFs with high short interest are simply the target of speculators that are anticipating a big decline for an industry or asset class. When this happens, the short interest can grow to alarming levels. For individual investors that are able to wait out near-term bears and focus on the long-term, it can mean a strong upside when sentiment turns. The Market Loves To Hate Oil As you’d expect, energy-related ETFs are an especially popular target for short sellers these days. In fact, almost every share held in long accounts for the SPDR S&P Oil & Gas Explorers ETF (NYSE: XOP) is also currently borrowed for short seller accounts. The latest headache for oil prices and oil stocks: fears are growing that U.S. oil storage tanks could reach capacity in April. While Petroleum Administration for Defense District (PADD 1) storage is near capacity at around 85%, total storage is only at 60% capacity. The PADD regions were created during WWII to… Read More