From hedging perspective (if shorts increased due to hedging),...

From hedging perspective (if shorts increased due to hedging), they don't really need to have a view on further revenue downgrades

They just cap their losses to a certain amount while still keeping exposure in AVH, which in fact indicates that they still maintain a positive long term outlook -once things improve > close the short and profit from appreciating market capitalisation.

If they believed that this is a dead end for AVH, they would have cut the loss and sold out (no need to short)

What we don't know how much of short increase is due to hedging and how much is due to betting on further declines in share price.