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. This includes company stock with net short positions in excess of 0.5% against their issued share capital along with the identity of the position holders.
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 (today is an exception). 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, 8 December, 2023 and comparing it to the one on Friday, 1 December, 2023.
Top 20 most shorted UK stocks on Friday, 8 December, 2023
Petrofac is still the UK’s most shorted stock after short sellers added another 1.31% to their net short position against the energy services company. That follows lasts weeks 1.99% increase. Petrofac helps design, build and operate and decommission energy facilities like refineries. It released a business update on the 8 December 2023, which seems to have kicked of the negative sentiment against the company’s stock in earnest. Here are the salient points that we have picked out:
- Pretofac management no longer expect to meet guidance previously issued for full year cash flow
- The board is examining a range of strategic and financial options with the objective of materially strengthening the Company’s balance sheet, securing bank guarantees and improving short-term liquidity
Anticipating missing guidance and hinting at a big equity raise does help to explain the 9.19% bet short position against Petrofac stock.
The preponderance of consumer discretionary companies suggests that short sellers think that consumers are going to be cutting back. Or is that continuing to cut back?
Mondi is a new entry into the top 20, replacing Barratt Developments. The packaging company did make the list of the 10 stocks with the greatest increase in net short position against them last week, and it’s there again this week, so the short sellers are actively increasing their bets against the company’s stock.
The 10 biggest increases in net short position over the last week
No surprises here, yet again. Petrofac saw the largest increase in the net short position against it this week, as it did last week.
Quite a gain against Ocado stock as well, one of the five consumer discretionary stocks on this list.
The 10 UK stocks whose net short position declined the most over the last week
Confusingly, consumer discretionary stocks make up half this list as well. That goes to show that not all stocks in a sector are created equal, and neither are those in any particular industry.
Compared to the big increasers, stocks with trimmed next short positions don’t tend to have any relevant news or data releases that would spark a position cut. I guess that suggests that exiting a position is more about price targets?
DISCLAIMER: James J. McCombie owns shares in Kingfisher and Greencore. 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.
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