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Pro Analysis

Hedge funds hate these 10 stocks, Goldman says

A maintenance technician inspects a U.S Air Force Boeing C-17 Globemaster III airplane at the Boeing Global Services and Support facility in San Antonio, Texas.
Luke Sharrett | Bloomberg | Getty Images
A maintenance technician inspects a U.S Air Force Boeing C-17 Globemaster III airplane at the Boeing Global Services and Support facility in San Antonio, Texas.

One of the main ways hedge funds make money is betting against companies they believe are overvalued, so investors should be wary of stocks with high levels of so-called short interest.

Goldman Sachs on Thursday shared with clients which stocks the smart money is short selling the most, according to the firm's latest "Hedge Fund Trend Monitor" report by Ben Snider.

The firm's very important short positions basket consists of 50 S&P 500 stocks with the "highest total dollar value of short interest outstanding."

Shorting is a trading strategy that involves selling borrowed shares with a view the stock will drop in value and the shares can be bought back later and returned for a profit.

Goldman's very important short positions list is up 8 percent this year through Aug. 14 underperforming the S&P 500's 12 percent return, according to the firm.

Here are the top 10 stocks in Goldman's very important short positions basket.