Published on 18 Jun 2024 on Insider Monkey · via Yahoo Finance

Why Are Hedge Funds Shorting Biomea Fusion, Inc. (BMEA)?

We recently compiled a list of What Is Short Selling In Stock Market? 15 Stocks Hedge Funds are Shorting. In this article, we are going to take a look at where Biomea Fusion, Inc. (NASDAQ:BMEA) stands against the other stocks hedge funds are shorting.

Short selling, also known as shorting or going short, is a trading method in which assets are borrowed and subsequently sold in order to profit from the stock's decline in price. Investors borrow securities from brokers and sell them on the open market to carry out a short sale. The investor can purchase the asset back at a reduced price, return it to the broker, and keep the difference as profit if the price of the security drops. If the price increases, the investor will have to pay more for the security and will suffer a loss. Hedge funds and institutional investors make the majority of conventional short sales or bets that a stock price will drop to protect their interests from falling stock prices or to speculate that shares are overpriced. On the other hand, activist short sellers investigate companies to identify targets they claim have questionable accounting or business procedures, distribute information (often in secret), and, if all goes according to plan, drive down the share price. Columbia University law professor Joshua Mitts' 2019 research, Short and Distort, discovered more than $20 billion in stock mispricing related to hundreds of anonymous attacks on public businesses between 2010 and 2017.