(Benzinga.Com) In the six-year bull market that has taken the S&P 500 to new all-time highs, there has been little need for hedging or protection from a weak stock market. However, a large part of what hedge funds are meant to do is protect investors from market risk via selectively short-selling stocks.
Underperformance

According to Goldman Sachs, hedge funds have now underperformed the S&P 500 for six consecutive years.One contributing factor to the underperformance has likely been the short positions that the funds have held during that time. Although there have certainly been some big losers in the past six years, shorting stocks has largely been a losing game.

Goldman’s “Hedge Fund Trend Monitor” includes a list of the most commonly shorted stocks among Goldman’s hedge fund clients. When the bull market finally comes to an end, hedge funds will be looking for the falling share prices of these stocks to serve as hedges against losses from the funds’ long positions.

Here are the 10 most shorted stocks by hedge funds:

1. AT&T Inc. (NYSE: T)
2. Walt Disney Co (NYSE: DIS)
3. International Business Machines Corp. (NYSE: IBM)
4. Verizon Communications Inc. (NYSE: VZ)
5. Intel Corporation (NASDAQ: INTC)
6. Kinder Morgan Inc (NYSE: KMI)
7. Exxon Mobil Corporation (NYSE: XOM)
8. Pfizer Inc. (NYSE: PFE)
9. Johnson & Johnson (NYSE: JNJ)
10. Deere & Company (NYSE: DE)

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