As tech stocks continue to surge with many making all-time highs in recent weeks, an increasing number of investors continue to bet against the giants, which is proving to be a painful trade. 

Current short positions in four big tech stocks, known as the FANG—Facebook Inc (FB), Amazon.com Inc (AMZN), Netflix Inc (NFLX) and Google Inc (GOOG) (via parent company Alphabet)—have reached record levels. As of May 4, short positions in the FANG's totaled $17.5 billion, up $4.2 billion on the year, or 31.7 percent, according to financial technology firm S3 Partners. 

The results: bad news for the shorts. Short sellers have been punished with total losses reaching $3.3 billion as the four stocks have turned in a stellar first four months of the year:

  • Facebook: latest share price $150.25, up 30.4 percent on the year
  • Amazon: latest share price $940.60, up 25.4 percent on the year
  • Netflix: latest share price $155.93, up 25.9 percent on the year
  • Google (Alphabet): latest share price $951.24, up 19.6 percent on the year

Large-cap stocks tend to attract more short interest, but as the stocks rally the short interest is showing no signs of subsiding. "It is not surprising that the FANG stocks are all in the top ten most shorted stocks in the U.S., or that the top ten most shorted stocks are easily beating year-to-date market returns and are up 21% for the year," S3 Partners said in a note to investors.

"What is surprising is that short sellers continue to build their positions as they rack up large mark to market losses month after month."

S3 advised that investors may be using the shorts as hedges against other longs, but as the FANG's continue to outperform the market by considerable margins, there is only so much pain short sellers can take. (See also: FAMGA: Clever Acronym, Faux Diversification)

"With both short interest and losses growing every month, short sellers are realizing that FANG’s bite might be worse than their bark."