Thanks for the excellent brain food posted earlier.
To answer the OP’s question Google and I were unable to find any funds that exclude highly shorted stocks as one of their main strategies. I’m sure some active managers are doing this behind the scenes but they aren’t advertising it.
I do know that a portfolio of 40-50 stocks will closely approximate their indices. If the short interest factor is as big as the MSCI paper suggests, then stock-picking the lowest SI stocks in the S&P500 would be expected to outperform the index despite the reduced diversification. Doing pairs trades (e.g. bullish and bearish spreads) on the top and bottom deciles would also be expected to outperform, unless SI is somehow factored into options prices. Of course that strategy is getting murdered at this unique moment.