Hedge fund managers and other professional investors predict increased shorting of US tech stocks

New research from ETP provider GraniteShares shows nearly two out of three professional investors predict shorting of US tech stocks will increase over the next six months with nearly a fifth forecasting a dramatic increase.

Its study with hedge funds, wealth managers, IFAs, fund managers and institutional investors found 63 per cent expect shorting of US tech stocks to increase over the next six months with 18 per cent predicting a dramatic increase. 

Just 17 per cent of investors believe the level of shorting will fall over the next six months while 20 per cent believe it will stay the same.

The research for GraniteShares, which offers UK sophisticated investors a suite of ETPs offering 3x short and 3x long positions on a range of single stock large US tech companies including Facebook, Amazon, Apple, Netflix, Alphabet, Google, Tesla, and Microsoft, as well as baskets or combinations of some of these stocks, found investors believe valuations of popular US tech stocks will remain under pressure over three months and 12 months.

Growing concerns about inflation and action from central banks to tighten monetary policy to stop economies overheating has hit tech stock valuations recently and the GraniteShares research shows investors expect the trend to continue.

Nearly half (45 per cent) believe valuations will continue to fall over the next three months with 10 per cent forecasting dramatic falls compared with 32 per cent who expect valuations to increase and 23 per cent who expect shares to trade sideways.

The picture is slightly brighter over 12 months – 40 per cent are forecasting tech valuations will drop with just 6 per cent expecting dramatic falls compared with 37 per cent who expect increased valuations and 23 per cent who expect valuations to remain broadly the same.

Will Rhind, Founder and CEO at GraniteShares, says: “Worries about inflation and concerns about US tech stocks being overvalued have hit share prices recently and the view from professional investors is that will mean a rise in shorting of the stocks for the rest of this year.
“Nearly two-thirds of professional investors expect shorting to increase and more expect valuations to drop over the next three months and 12 months.”

GraniteShares currently offers 54 exchange traded products (ETPs) listed on the London Stock Exchange. They consist of a suite of index ETPs tracking FAANG stocks and a suite of Short and Leveraged Single Stock Daily ETPs tracking some of the most popular companies in UK and U.S. markets.  

Its FAANG, GAFAM and FATANG product suite, offers long, short and 3X leveraged ETFs on FAANG, GAFAM and FATANG indices and can be traded in a single ticker symbol via ordinary brokerage accounts. FAANG consists of Facebook, Amazon, Apple, Netflix, and Google while GAFAM includes Google, Apple, Facebook Amazon, and Microsoft and FATANG covers Facebook, Amazon, Tesla, Apple, Netflix, and Google.

ETPs offer a pure way to gain exposure to top tech companies in the US market. Indices are equally weighted and rebalanced quarterly.