Short Sellers Profit Big From Betting Against Struggling Small Caps

Short sellers have made $13 billion in profits betting against small cap stocks this year, while losing $140 billion shorting large caps.

Small caps have lagged as AI and tech stocks drove gains in mega caps like Nvidia and Tesla. Performance has been "top-down".

Small caps initially rallied mid-year but have fallen sharply since August, with short sellers profiting.

Small caps have little tech exposure and are more affected by tight credit conditions.

Short selling against small caps is less than 10% of total but has increased recently as traders bet on continued underperformance.