Yep, the most shorted UK stock is still Ocado

UPDATE: There appears to have been an error in the FCA published short position update for July 7, 2023. Odey Asset Management was reported as having two current positions against Metro Bank. There should be only one. As a result when calculating the top twenty and net change in short position Metro Bank was I believe unfairly placed in the top twenty. It should not have been said to have gotten there from 89th place, which is where it should have been.

If someone is betting heavily against a UK stock I either own, or plan to own, then I want to know about it. Luckily for me, all firms with a net short position greater than or equal to 0.1% of the issued share capital of a UK listed company have to report that position to the the Financial Conduct Authority (FCA). The FCA publishes a daily short position update based on the notifications that it receives.

The FCA’s daily short position update is an important source of information for those who invest in UK stocks. I tend to ignore most of the daily updates and focus on the Friday one. There a a few things I like to do with it. In this post I will be looking at the short position update from Friday, 7 July, 2023

Top 20 most shorted UK stocks on 7 July, 2023

The first thing I do is rank all the stocks by their net short position. To do this I add up all the short positions reported by different reporting institutions against the same stock. The top twenty most shorted UK stocks are tabulated below.

Ocado tops the list again with a reported net short position of 5.25% against it. However, short sellers reduced their positions by 0.99% since our last report. The rumours of an incoming Amazon bid lifted the Ocado stock price a few weeks ago, and it did not fall when those rumours were quashed by both parties. Although that’s not good news for the short sellers, perhaps it is good for investors. This might be a sign that the market thinks that a cheap sale is not the best idea for Ocado.

Perhaps instead a breakup is the way to unlock value. Ocado could be split in two. The online grocer, which is half owned by Marks & Spencer, seems to be doing well enough. It is profitable, but low margin. Its the tech arm that is lagging. This is the entity that is responsible for todays announcement of Ocado building its first customer fulfilment centre in Asia for its Japan based online grocer partner. It also has partnerships with Kroger in the US, building robotic warehouses for them. That would have been a road bump for any potential Amazon deal anyway.

Ocado developed its automated warehousing and dispatch technology to serve its own online delivery business. Its potential for licensing and sale to third parties has been the driving force behind the rise in the company’s share price in recent years as management rebranded it as a force in technology rather than just click and deliver supermarket. But, it seems investors are still a bit confused as to what Ocado really is. Splitting it in two would clear the confusion. And it would be better than allowing investors to be lured into selling to whomever offers them a 25% premium to a rock bottom share price and convinced they got a good deal.

Rank	Company	Sector	Industry	Net Short Position	Change Since Last Week
1	Ocado	Consumer Staples	Food Retailers and Wholesalers	5.25%	-0.99%
2	Kingfisher	Consumer Discretionary	Home Improvement Retailers	4.66%	-0.06%
3	ITM Power	Energy	Renewable Energy Equipment	4.55%	+0.11%
4	Keywords Studios	Consumer Discretionary	Electronic Entertainment	4.11%	+0.14%
5	BooHoo	Consumer Discretionary	Apparel Retailers	3.67%	no change
6	Naked Wines	Consumer Discretionary	Speciality Retailers	3.63%	no change
7	Moonpig	Consumer Discretionary	Speciality Retailers	3.52%	-0.05%
8	Hargreaves Lansdown	Financials	Asset Managers and Custodians	3.40%	no change
9	Metro Bank	Financials	Banks	3.40%	+1.91%
10	Hammerson	Real Estate	Retail REITs	3.37%	-0.18%
11	Cineworld	Consumer Discretionary	Recreational Services	3.29%	no change
12	Harbour Energy	Energy	Oil: Crude Producers	3.29%	no change
13	Johnson Matthey	Basic Materials	Chemicals: Diversified	2.96%	+0.09%
14	J. Sainsbury	Consumer Staples	Food Retailers and Wholesalers	2.92%	+0.03%
15	Tullow Oil	Energy	Oil: Crude Producers	2.88%	-0.54%
16	Petrofac	Energy	Oil Equipment and Services	2.87%	-0.73%
17	Primary Health Properties	Real Estate	Health Care REITs	2.85%	no change
18	Melrose Industries	Industrials	Aerospace	2.69%	no change
19	Abrdn	Financials	Asset Managers and Custodians	2.60%	+0.10%
20	DFS Furniture	Consumer Discretionary	Home Improvement Retailers	2.31%	-0.08%

Kingfisher, the owner of B&Q and Screwfix, is again the second most shorted stock. But the net short position has been cut by 0.06% over the week. The top six is in fact unchanged over the week with ITM Power, Keywords Studios, BooHoo, and Naked Wines all holding their positions. But only ITM and Keywords have seen net short position increases. There has been no change in the net short positions against BooHoo and Naked Wines.

Outside the top six it’s all change. Rather than labouring through the all changes, I would refer the reader to the table above. However, it’s worth pointing out the move from 7th last week to 16th this week by Petrofac stock after the net short position against it was cut by 0.73%. Also, Metro Bank has landed in 9th place this week from, wait for it…89th last week. The net short position against the challenger bank increased from 1.49% to 3.40%. British Land dropped out of the top 20.

DISCLAIMER: James J. McCombie owns shares in Kingfisher. The Storied Investor has no beneficial ownership position in any of the stocks or securities mentioned. No comment in this article should be construed as a recommendation of, or opinion regarding the future performance of, any stock or security or collection of them mentioned herein. Opinions expressed are the author’s and do not represent the views of The Storied Investor.