Tesla is the Most Shorted Stock: 2 ETFs to Watch - ETF News And Commentary

The darling of Wall Street,

, has recently witnessed a surge in investors betting against the company. Tesla is now the most shorted company on the Nasdaq 100, after being the fourth most shorted stock a month ago, according to research firm

.

Short interest (the number of shares on loan) in the Nasdaq Composite has risen by 10% year to date, to 2.9% of shares outstanding, indicating that investors expect some of the big names in the index to fall further. Currently,

% of the float is sold short for Tesla, indicating that around one-third of investors are betting against it. The stock has lost around 16% in the past one month after having returned an outstanding 357% in the past one year (read:

).

The current fall in Tesla shares comes in the wake of a broad-based sell-off in the Technology sector, which saw some terrible trading over the past few weeks, particularly in momentum stocks.   The Nasdaq Composite index lost around 3% last week, its worst weekly hit since June 2012.

Momentum stocks have recent been broadly dumped by investors over valuation concerns, bubble fears, profit-taking activity and some sluggish global economic indicators. Hefty valuations have compelled investors to move from highflying securities, which have shown incredible performance last year (read:

?).

Though the short interest data points towards some more pain for Tesla in the near term, investors should note that the figure has actually fallen over the past couple of days. This could signal that investors might gradually reduce their bearish bets on this stock.

Also, it is worth noting that earnings estimates have actually been moving higher for the company, despite the pessimism. Moreover, most of the market experts are still bullish on this maker of electric-cars, which is slated to release its earnings on May 5.

Given both these bearish and bullish views, investors should keep a close eye on the ETFs having exposure to Tesla. Given the volatility in Tesla, these ETFs might also face some uncertain trading days ahead. 

While Tesla has lost 16%, the below mentioned ETFs have shed more than 6% in the past one month, so they haven't exactly been immune to the selling pressure either:

The fund focuses on the global alternative energy sector, while tracking the Ardour Global Index Extra Liquid. The fund holds a basket of 31 stocks with Tesla Motors ranking among the top three holdings (read:

).

The ETF seems to have reduced its exposure in Tesla, as it now has around 9% allocation in the portfolio, as compared to the near 14% exposure just a month ago (largely thanks to the drop in the stock's price).  Currently, Vestas Wind Systems A/S occupies the top spot with 10.6% allocation.

The fund is heavily weighted to the Industrial and IT sectors, which together comprise around 77% of the fund assets. Country-wise, the fund has 62% exposure to U.S. stocks, while China (11%) and Denmark (10.6%) are the other two counties in the top three.

The fund has performed quite well over the last one year, adding 51%. However, the ETF has been losing lately and is down around 7% over the past one month.

The fund tracks the NASDAQ Clean Edge Green Energy Index and manages an asset base of $185.4 million.

The fund holds a small basket of 42 stocks and has also reduced its exposure to Tesla in the past one month. The fund now allocates around 7% to this stock. Linear Technology Corporation (8.53%) occupies the top position, followed by First Solar, Inc. (8.01%) and Cree, Inc. (7.68%).

Sector-wise, Technology occupies the top spot having more than one-third exposure in the fund, followed by Oil and Gas and Industrials (see

).

The fund which had delivered a stellar return of 68% in the last one year has lost more than 7% over the past one month. The fund charges 70 basis points annually as fees.

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