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 three of the 30 Dow stocks had sizable short interest between July 31 and August 14; that is, more than 40 million shares short. Almost half of the index’s components had short interest of more than 20 million shares.

With the pandemic showing no signs that it will fade anytime soon, and a contentious election coming up, investors have been trying to figure out what to do next. They may wonder then what the short sellers have expected from some of the biggest, most well-respected names on Wall Street. As far as Dow stocks were concerned, short sellers seemed to head for the exits earlier this month, as the markets approached all-time highs again.

As of the middle of the month settlement date, the most recently reported period, short sellers still favored Pfizer Inc. (NYSE: PFE), Exxon Mobil Corp. (NYSE: XOM) and Intel Corp. (NASDAQ: INTC) above all other Dow stocks. Note though that both Exxon and Pfizer are scheduled to leave the Dow at the end of the month.

Pfizer

> Shares short: around 50.22 million
> Change from prior period: −6.1%
> Percentage of float: 0.9

This sizable rise in the number of Pfizer shares short in the prior period was partly reclaimed, but the pharmaceutical leader remained at the top spot on the list. It also is still 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, the days to cover figure was still less than two.

Shares of this maker of Lipitor, Viagra and Xanax have lagged, despite it being a frontrunner in the race for a COVID-19 vaccine. Its share price ended the first half of August about 1% lower, after spending most of the period in the red. The S&P 500 rose more than 3% during the short interest period.

Pfizer stock closed most recently at $38.41 per share, after a marginal gain in the past week. The 52-week low of $27.88 was seen in March, and the 52-week high of $40.97 was reached early this year. The shares now trade about 2% lower than they did at the beginning of the year but are up over 32% from the March low.

Exxon

> Shares short: around 41.80 million
> Change from prior period: −13.9%
> Percentage of float: 1.0

The rate at which short interest in the oil supermajor shrank increased in the first half of this month, but the stock clung to the second spot on the most shorted Dow components list. At the average daily volume on the latest settlement date, it would take investors about two days to cover their short interest.

Exxon posted quarterly results at the beginning of the period that were not as bad as they could have been. Short sellers watched the share price rise more than 10% in those two weeks but then retreat to end the period with a gain of less than 3%. Note that the Dow ended the first half of this month almost 6% higher.

After a pullback of over 3% in the past week, Exxon Mobil stock closed trading most recently at $40.89 a share. That was in a 52-week range of $75.18 (last September) to $30.11 (in March). The most recent share price is about 29% higher since the year-to-date low in March, compared to more than a 49% gain in the S&P 500 in that time.