Goldman Sachs identifies the 25 stocks that short-sellers piled the most bearish bets upon even as Reddit traders squeezed out Wall Street

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  • By the end of January, a group of retail traders pushed ‘meme-stock’ prices to record highs. 
  • The phenomenon spooked many, but numerous short-sellers doubled down on their bets amid the chaos.
  • Goldman Sachs identified 25 names that saw the greatest increase in short interest during the mania.
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It has been a little over two weeks since an army of Reddit retail traders battled Wall Street short-sellers.

The latter group had been betting against what they thought were doomed stocks like GameStop and AMC amid digitization and the pandemic. 

Little did they know that a group of amateur traders on Reddit would gather to send the prices of these so-called meme stocks to record highs, and force them to close out their positions. 

This came with a high cost for many. Ortex data shows that investors betting against GameStop lost up to $19 billion just three days after the phenomenon unfolded. 

There is always a risk of a short-squeeze that comes along with short-selling. But in light of this event, what started as a short-squeeze resulted in a gamma-squeeze, as Reddit traders turned to call options. The increasing amount of trading in call options forced short-sellers to further buy underlying assets to hedge their short exposures. 

To some like veteran trader Steve Sosnick, the GameStop frenzy could have long-term market implications, causing more reluctance to both short-sell and take on extreme short positions. 

But not everyone in the market was spooked, as many continued to heavily bet against Russell 3000 stocks amid the chaos.

Between January 15 and January 29, just as short-sellers and hedge funds were brought to their knees, many Russell 3000 stocks saw a large increase in short interest – or shares that had been sold short but not yet closed out — according to a Feb. 10 Goldman Sachs note. 

In the note, Goldman identified 25 names that saw the greatest increase in short interest during that period (January 15 through 29). They are listed from lowest to highest based on their change in short interest as a percentage of their overall floats.