Even Jeff Bezos is surely surprised at the murder you could have done by going long on Amazon and shorting the less popular retail stocks.
Reuters
You could have made the S&P 500 four times this year had you fully embraced an Amazon-led retail apocalypse.
All you had to do was make bullish bets on Amazon while placing bearish bets on the most shorted retailers in proportion to their short interest, according to data compiled by financial analysis provider S3 Partners. Putting $100 million to work on each end of the trade would have returned 43.7% in 2017, according to company data.
That’s more than four times the roughly 10% gain of the benchmark S&P 500 this year through last week’s close and well over double the return of the Nasdaq Composite, which climbed 18%.
One company that has recently felt the effects of Amazon’s growing influence is Target, which announced last Friday that it had cut the prices of thousands of items in a bid to regain market share from the e-commerce juggernaut. . Investors remained skeptical and sold the company’s shares, sending them down 2% on the day.
This is just the latest sign of trader skepticism around Target, which is the multiline’s shortest stock.
distribution sector
and would therefore have been the biggest downside target in the aforementioned pair trade, according to S3.
Investors are holding nearly $3.3 billion in Target stock short, having made $480 million in market earnings bets against the company so far in 2017, according to data from S3.
But Target is just one of many retailers hard hit as the industry adjusts to a new reality in which customers are increasingly using online outlets like Amazon for their shopping needs. As of Wednesday, 6,403 store closures had been announced this year, Business Insider reported.
The best-selling multiline retail stocks as a group are down 13.6% this year. This contrasts sharply with Amazon’s nearly 30% gain.
So what other retailers beyond Target are in the crosshairs of short sellers? No surprise here: Kohl’s, Dollar General, Nordstrom and Macy’s round out the top five. Here is a full list of the shortest basket, courtesy of S3 Partners:
A breakdown of the best-selling multiline retail stocks.
S3 Partners
