Analytics firm S3 Partners reports a nuanced picture of recent market activity, suggesting the narrative around increased short selling may be incomplete. While short interest—where investors bet on falling share prices—has indeed risen, active long holdings have increased by an even greater margin throughout 2026. This indicates a broader trend of increased market exposure among active investors. S3 Partners is a financial analytics firm that provides data and insights on short selling, stock loan, and securities finance markets. They aim to offer transparency and analytics to investment professionals.
According to S3’s data, total active short interest increased by $US81 billion during 2026, climbing from $US2.42 trillion to $US2.5 trillion. However, total active long holdings saw a more significant jump, rising by $US271 billion, from $US14.29 trillion to $US14.56 trillion. This disparity suggests a more complex dynamic than a simple bearish outlook.
S3 explains that the simultaneous increase in both active long and short positions is interconnected. Active investors, including hedge funds, family offices, and sovereign wealth funds, are expanding their overall market exposure. To secure increased financing from brokers to support these larger positions, they are required to increase balances on both the long and short sides of their portfolios. This dynamic contributes to the observed growth in both long and short interest.
Regarding sector positioning, S3 notes that the largest increases in short exposure were concentrated in financial securities (ETFs and funds), materials, and information technology. Conversely, the largest increases in long exposure were observed in industrials, materials, and energy sectors, reflecting potentially different investment strategies and outlooks across these various segments.
