It takes a certain kind of courage to short sell blue chips, such as the Dow Jones industrial average components. Short sellers are betting on these companies to fail, or at least for their share prices to fall handily. Plus, those sellers are responsible for paying the dividends on the stocks they short.

Maybe it is little surprise that only two of the 30 Dow stocks had sizable short interest between May 29 and June 15; that is, more than 50 million shares short. Almost a third of the index’s components had short interest of more than 25 million shares.

While the stock market had recovered much of its panic-selling losses from March, ongoing social unrest and a new rise in the numbers of COVID-19 cases as state economies “reopened” had many Americans worried. Investors trying to figure out what to do next may wonder then what the short sellers expected from some of the biggest, most well-respected names on Wall Street. Did they believe the markets came back too quickly and the lows would be retested?

As of the mid-month settlement date, the most recently reported period, short sellers still favored Exxon Mobil Corp. (NYSE: XOM), Pfizer Inc. (NYSE: PFE) and Microsoft Corp. (NASDAQ: MSFT) above all other Dow stocks.

Exxon

> Shares short: around 59.08 million
> Change from prior period: −2.5%
> Percentage of float: 1.4

Despite short sellers taking a bit of a breather in the most recent period, the oil supermajor remained the most shorted Dow stock early this month. Not that long ago, Exxon had hovered around the number five spot on the list for a time before floating up to the surface. At the average daily volume on the latest settlement date, the days to cover figure was less than two.

Many believed Exxon and its peers bounced back from the instant recession too quickly. Short sellers watched the share price rise more than 21% but then retreat and end the period less than 4% higher. Note that the Dow ended the initial two weeks of this month around 4% higher.

After retreating over 4% in the past week, Exxon Mobil stock closed trading most recently at $44.52 a share. That was in a 52-week range of $77.93 (seen last July) to $30.11 (in March). The most recent share price is more than 41% higher since the year-to-date low in March, compared to a 40% or so gain in the S&P 500.

Pfizer

> Shares short: around 53.75 million
> Change from prior period: 3.3%
> Percentage of float: 1.0

This small increase in Pfizer shares short still left the pharmaceutical leader clinging to the number two spot on the list. It also was still well below the year-to-date high of around 61 million shares short seen back in January. At the average daily trading volume on the latest settlement date, it would take investors less than two days to cover their short interest.

The maker of Lipitor, Viagra and Xanax saw positive results this month for its eczema treatment for teens. Its shares ended more than 12% lower in the first two weeks of this month, and they continued to retreat afterward. The S&P 500 rose more than 3% during the short interest period.

Pfizer stock closed most recently at $32.19 per share, which is about 4% lower than a week ago. The 52-week low of $27.88 was seen in March, and the 52-week high of $44.56 was reached last July. The shares now trade almost 18% lower than they did at the beginning of the year but are up about 11% from the March low.