MW These 16 stocks are a short seller's dream - likely losers no matter what the market does
By Mark Hulbert
Borrowing costs eat into trading profits. These stocks are less expensive to short.
Certain stocks are good bets to lag the market in the coming months, according to a new study, regardless of what the market does. Sixteen of these stocks are listed in a table at the end of this column.
Short sellers have good odds of turning a profit with these equities - even if the Iran conflict is soon resolved, oil prices decline, U.S. interest rates are cut, or any other events that are likely to make the market soar transpire.
The 16 stocks listed below earned their spot because their shares are expensive to borrow in the share-lending market. That means relatively few short sellers are willing to consider them, which in turn means that they most likely are trading for more than they would otherwise. And that means their stock price is more likely to decline.
The new study finds that even after paying these stocks' high borrowing costs, a short seller has a good chance of profiting from such stocks. Consider the terrible performance of a hypothetical portfolio containing stocks whose borrowing costs exceeded 50% annually. From January 2010 to June 2025, this portfolio lagged the overall market by 81.4% annualized.
Unfortunately, a short seller couldn't have turned a profit with these stocks, because the 81.4% negative alpha didn't reflect borrowing costs. Once those costs are taken into account, a short seller's potential profit shrinks to zero, in fact. Still, this result shows the extent to which hard-to-short stocks are hugely overvalued, on average.
Yet the study's researchers found a way for short sellers to profit: Focus on stocks whose borrowing costs are high, but not higher than 50%. Specifically, they constructed another portfolio that sold short stocks whose annualized borrowing costs were between 10% and 50%. Between January 2010 and mid-2025, this portfolio beat the overall market by 22% annualized on a risk-adjusted basis, with an average holding period of each stock of about six months.
Note carefully that you should not expect a portfolio of such stocks to decline immediately. The 23 hard-to-short stocks I listed in one of my December 2025 columns, for example, have since declined only moderately.
The list below contains the 16 stocks within the Russell 3000 Index RUA that have market capitalizations above $100 million and whose borrowing costs recently were between 10% and 50% annualized. They are listed in descending order of their market valuation:
Ticker Stock LCID Lucid Group Inc. EVCM EverCommerce Inc. NNE Nano Nuclear Energy Inc. SLS Sellas Life Sciences Group Inc. SERV Serve Robotics Inc. RXT Rackspace Technology Inc. CV CapsoVision Inc. GETY Getty Images Holdings Inc. ATLN Atlantic International Corp. BYND Beyond Meat Inc. PDYN Palladyne AI Corp. CD Chaince Digital Holdings Inc. NFE New Fortress Energy Inc. FLYX Flyexclusive Inc. CRDF Cardiff Oncology Inc. HURA TuHURA Biosciences Inc.
Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com.
More: These 10 stocks are crushing the S&P 500 - yet the media and Wall Street ignore them
Plus: This 'single greatest' stock-market predictor has never been more bearish
-Mark Hulbert
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March 27, 2026 08:05 ET (12:05 GMT)
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