The UK’s Most Shorted Stocks

Hedge
fund
Marshall
Wace
shorted
2.37%
of
the
stock
in
the
days
after
the
profit
warning
–
the
largest
overall
position
taken
in
the
UK
the
past
month.

So
far
this
year,
Burberry
is
down
48%,
trading
at
£7.26.
Since
the
start
of
2024,
Morningstar’s
analyst
Jelena
Sokolova
has
downgraded
the
stock
four
times,
from
£24.60
to
£13.30,
meaning
it
is
still
significantly
undervalued.

UK
Stocks
Under
Pressure

Elsewhere,
oil
services
company
Petrofac
(PFC)
remains
the
most-shorted
UK
stock
overall,
with
a
net
short
of
just
under
10%.
The
largest
single
short
position
is
held
by
Astaris
Capital
Management,
worth
2.51%.
The
company’s
shares
were
suspended
earlier
this
year
after
falling
more
than
99%,
but
when
trading
resumed
in
June,
the
company
jumped
over
50%.
Shares
in
the
company
are
currently
down
65%
in
2024.

The
second
most-shorted
stock
is
Diversified
Energy
Co
(DEC),
which
is
one
of
only
four
stocks
in
our
list
with
a
positive
return
so
far
this
year
(22%).
The
total
short
position
has
been
increased
enough
over
the
past
month
to
marginally
overtake
supermarket
Ocado
(OCDO),
which,
like
Burberry,
reported
last
week
and
is
currently
down
50%
in
2024.
Both
companies
have
about
7%
of
their
stocks
shorted.

Ocado,
which
was
kicked
out
of
the
FTSE
100
last
month,
jumped
15%
last
week
and
a
further
11%
on
Monday
(July
22)
as
its
losses
were
reduced
and
demand
for
its
technology
solutions
business
grew.
Both
D1
Capital
Partners
and
BlackRock
took
positions
against
the
company
after
earnings
were
announced
–
of
2.24%
and
1.96%,
respectively
–
and
are
the
two
biggest
shorters
of
the
online
grocer.
Ocado’s
share
price
is
currently
£4.20,
below
Morningstar
equity
analyst
Ioannis
Pontikis’s
Fair
Value
Estimate
of
£9.20.

In
this
list,
we
have
included
all
stocks
where
the
total
net
positions
are
above
3%.
Six
of
these
stocks
are
rated
by
Morningstar
analysts,
and
all
but
one
are
considered
to
be
trading
below
their
Fair
Value
Estimates.
Of
these,
the
stocks
with
the
biggest
share
price
falls
are
Petrofac,
Ocado
and
Burberry,
while
those
with
the
biggest
gains
are
FD
Technologies
(FDP)
with
22%,
Kingfisher
(KGF)
at
16%,
and
Diversified
Energy
Company.

What
is
Short
Selling?
How
Does
it
Work?

Short
selling
can
be
a
highly
profitable way
to
exploit
the
falling
share
price
of
companies
in
distress.
It
involves
selling
shares
you
don’t
own
to
make
a
profit
from
the
fall
in
the
price.

To
do
this,
you
borrow
them
from
specialist
firms
like
brokers,
sell
them
at
the
current
market
price
with
the
hope
of
buying
them
back
at
a
cheaper
price
later.
This
active
trading
strategy
is
usually
only
undertaken
by
professional
investors,
but
often
provides
an
early
warning
sign
of
problems
ahead
that
can
be
picked
up
on
by
all.

Firms
that
have
attracted
short
sellers
in
the
past
include
Thomas
Cook
and
Carillion
in
the
UK,
and

scandal-hit
Wirecard
in
Germany.
Shorting
tends
to
attract
other
shorters,
however,
and
some
argue
it
only
hastens
the
demise
of
a
company. Sometimes
a
company
on
a
shorting
list
may
have
terminal
problems;
other
times
it’s
just
a
temporary
loss
of
confidence
prior
to
a
turnaround,
or
a
buyout,
which
takes
the
company
off
the
market
or
puts
it
in
new
hands.

Alongside
specialist
trading
firms
and
hedge
funds,
some
of
the
biggest
asset
managers
are
involved
in
shorting,
including
BlackRock,
Jupiter
and
JP
Morgan.

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