Hedge funds resume shorting after biggest short squeeze since 2020

Hedge funds are back to their old tricks. Just weeks after getting caught in the most violent short squeeze since the pandemic-era rebound of March 2020, institutional short sellers are quietly rebuilding bearish positions, this time with a bit more finesse and a lot more caution. The whiplash started in March 2026, when hedge funds went on a historic shorting spree. According to Goldman Sachs prime brokerage data, short sales outpaced long buys by a ratio of 7.6 to 1 globally. That was the fastest pace of net selling in 13 years. Roughly 76% of those short sales were concentrated in major stock indexes and ETFs, meaning funds weren’t just picking off individual companies. They were betting against the entire market. The squeeze that followed Then came April 8. President Trump announced a temporary ceasefire in the US-Iran conflict, and equity markets responded the way equity markets do when existential geopolitical risk suddenly evaporates: they ripped higher. Hedge funds scrambled to cover. The pace of short covering was the fastest since March 2020, when the post-pandemic rebound caught bearish funds similarly flat-footed. Short exposure in macro products had reached 12% of tota...