Is High Short Interest Good Or Bad For A Stock?

Are you curious about whether high short interest is good or bad for a stock? Look no further! In this video, we'll dive into the world of short interest and explore its impact on stock performance.

Short interest has been a hot topic since the Gamestop short squeeze of 2021, but was that event just an outlier? To answer this question, we'll define short-interest and the short-interest ratio. We'll also examine the most shorted stocks, which typically have a short interest of about 20%, and the lowest deciles, which have less than 2%.

But is high short interest good or bad for a stock's future returns? In an article titled "The Predictiveness of Short Interest," the authors found that high short interest is followed by weak returns. We'll take a look at their chart, which shows that the deciles with the highest short interest have the weakest performance over one year.

So, what's the takeaway? Low short interest companies tend to outperform the average company, meaning that a high short interest is not likely where you'll find the next multibagger. Don't be fooled by anecdotal data and short squeezes - this video will provide you with a clear understanding of the impact of short interest on stock performance.

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You can read more about it here:
https://www.quantifiedstrategies.com/is-high-short-interest-good-or-bad

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