Is Capital One Financial Corporation (COF) The Most Crowded Hedge Fund Stock That is Targeted by Short Sellers?

We recently published a list of 15 Most Crowded Hedge Fund Stocks That Are Targeted by Short Sellers. In this article, we are going to take a look at where Capital One Financial Corporation (NYSE:COF) stands against other most crowded hedge fund stocks that are targeted by short sellers.

Hedge funds piling into a stock is a signal of conviction. After all, if institutional investors are backing a company, there has to be a good reason for it, right?

Things get interesting when the same stock ends up with a high short interest. Where some investors back the company to become successful, others bet on its downfall. This contradiction is often eagerly tracked by investors, as it can potentially lead to explosive moves to either side.

Consider, for instance, a scenario where a stock with a high short interest and a high hedge fund holding starts going up. As everyone rushes to buy more of the already popular stock, short sellers rush to close their positions, triggering a strong bull rally.

We decided to shortlist stocks that were the most likely candidates for such a rally. To come up with our list of 15 most crowded hedge fund stocks that are targeted by short sellers, we only considered stocks with a market cap of at least $1 billion and a short interest of at least 3%. We then ranked these stocks by the number of hedge funds that have the stock in their portfolio.

Capital One Financial Corporation (NYSE:COF)

Number of Hedge Fund Holders: 89

Short Interest:  5.94%

Capital One Financial Corporation (NYSE:COF) is a financial services holding company. It provides different financial products and services. The company generates its revenue through Consumer Banking, Credit Card, and Commercial Banking divisions.

The US automotive industry will likely encounter significant challenges due to President Trump’s recently announced tariffs on imported vehicles and parts. The auto tariff imposition is likely to affect consumers through increased vehicle prices, reduced purchasing power, and increased financial pressure. It will lead to reduced consumer spending, negatively affecting the company’s revenue.

Capital One’s CEO, Richard Fairbank, recently commented:

“If the tariff wars sort of really continue on, the auto business is I think might be really quite impacted because the immediate effect would be an almost certain increase in vehicle prices. And that would have sort of mixed effects on auto credit.”

“But with production costs rising, supply chain costs rising, you could just really end up with vehicle value disruption in the business.”

Capital One Financial Corporation (NYSE:COF) received an upgrade from BTIG with an increased recommendation from Neutral to Buy and a price target of $208. The upgrade was based on the potential for the company’s acquisition of Discover Financial. The high short interest in the stock is probably a result of the merger arbitrage bets by hedge funds.

Overall, COF ranks 4th on our list of most crowded hedge fund stocks that are targeted by short sellers. While we acknowledge the potential of COF as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than COF but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.