Borrowing to Short Stocks Nears Five-Year High as Anthropic IPO Could Renew AI Interest

The amount hedge funds borrow to wager on falling share prices is near a five-year high, while a potential Anthropic IPO could renew investor interest in AI stocks.

During October, Goldman Sachs hedge fund clients sold short about $5 in stocks for every $1 they bought. The amount of stock borrowed by hedge funds to bet on declines is close to its highest level in five years. Short sellers borrow shares and sell them, then later buy shares to close their positions.

Overall investor exposure to stocks has moved toward historical norms. Active managers’ exposure to U.S. equities fell to its lowest level in more than a month, while funds using computer-driven strategies also reduced holdings.

If stock prices rise, short sellers may need to buy shares to close their positions, adding buying pressure. Anthropic’s planned IPO could renew investor interest in AI and potentially help drive a rebound in technology shares.