Hedge funds have been increasing their bets against US Antimony Corporation, American Resources Corporation and MP Materials, with short positions rising sharply this year according to S&P Global Market Intelligence data. The share prices of these critical‑minerals firms rocketed in 2025 after the Trump administration injected billions in equity stakes, loans and contracts to break China’s grip on the supply chain.

Investors now fear the rally has outpaced fundamentals. Siegfried Eggert of Grizzly Research said some stocks were bid up by “rhetoric” and lack “enough economic substance to sustain these stock prices.” China’s ability to flood the market and its decades‑long processing dominance keep the long‑term outlook uncertain.

Government support has been sizable: MP Materials received an equity stake and a minimum price guarantee; US Antimony Corporation won a $245mn Pentagon contract and a $27mn Ukraine‑linked investment; American Resources’ Re Element secured $25mn from the Defense Department; USA Rare Earth obtained $1.6bn conditional funding for a ~10% stake. Retail inflows topped $200mn into USAC and USA Rare Earth last year.

Despite this, China still controls most processing capacity. Short interest has surged — USAC shares on loan rose from 23% to 42% of market cap, ARC from 9% to 23%, and MP and USA Rare Earth also saw higher borrowing. Last month China placed MP and USA Rare Earth on its export‑control list. MP noted that a “very substantial portion” of its short interest stems from arbitrage of its $862mn convertible bonds rather than pure bearish bets.