Hedge funds hate these 10 stocks, Goldman says

  • Goldman Sachs shares its list of top stocks hedge funds are betting against the most.
  • The basket includes AT&T, Wal-Mart, Nvidia and IBM.
People walk past an AT&T store in New York.
Kena Betancur | AFP | Getty Images
People walk past an AT&T store in New York.

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 listed which stocks professional managers are short selling the most in its latest "Hedge Fund Trend Monitor" report by Ben Snider on Tuesday.

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." The basket includes AT&T, Wal-Mart, Nvidia and IBM.

Shorting is a trading strategy that involves selling borrowed shares with a view that 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 18 percent this year through Nov. 20, slightly outperforming the S&P 500's 17 percent gain, according to the firm.

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

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