Dan Loeb, CEO of hedge fund Third Point LLC, says short selling is regaining relevance as market conditions shift, creating opportunities to profit from previously crowded trades, according to a report by Bloomberg.
The report cites Loeb as saying at the iConnections Global Alts conference in Miami Beach, that 2026 is a year where both long and short positions are generating alpha and profits.
“The lost art of short selling has come back and it’s absolutely critical this year,” Loeb said, noting that technology giants, which had driven markets higher for years, are now underperforming, opening windows for selective short positions. A Bloomberg index tracking the so-called “Magnificent Seven” tech stocks is down nearly 6% year-to-date.
Third Point had previously reduced single-stock shorts during the meme-stock craze and shifted toward diversified short baskets and hedges. Loeb highlighted a broader trend of moving from highly owned, large-cap stocks toward more niche investment opportunities.
The shift comes as short-biased hedge funds have dwindled over the years, with HFR tracking showing a more than 70% drop in such funds from 2008 to 2024. Activist short-selling campaigns have also declined sharply from their 2015 peak.
