The frantic market share of small-cap stocks such as Gamestop GME,
and AMC Entertainment AMC,
drew incredible reactions on Wall Street.
But while some may be tempted to dismiss them as side shows, this chart from Société Générale suggests that the growing gains from a very short-lived share are a much larger phenomenon.
Indeed, the shortest shares in the $ 3 trillion Russell 2000RUT index have made huge gains since the end of last year, ahead of the rest of their peers.
The first shortest 5% doubled in value at the end of October, eliminating the next shortest 5%, which in turn outperformed the shortest shares.
“This top tranche has now broken away from the next, which means that the short interest rate itself is the target for much of this business,” Andrew Lapthorne, head of quantitative equity research at Société Générale, said in a statement. Wednesday’s note.
See: It’s not just GameStop: Here are some of the other short-circuited actions that disappear above
Analysts have suggested that retailers who gather on platforms such as Reddit and Discord are actively looking for shares with a high percentage of short interest in an effort to generate short-term pressure. The hope that the sellers in the yard will face punished losses will cover their shorts and buy the shares back, accelerating the gains.
S&P 500 SPX,
DJIA Industrial Dow Jones,
and Nasdaq Composite COMP,
are on pace for a 2% loss this week.
Read: Is trading in GameStop and AMC a major risk? Analysts weigh