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, 2 February, 2023 and comparing it to the one issued two weeks before then.
Top 20 most shorted UK stocks on Friday, 2 February, 2024
Petrofac was the UK’s most shorted stock back in December when we last issued a short sellers report. It is still the most shorted stock now with a massive 11.49% net short position (NSP) built against it. I don’t recall seeing a position of this size before. Kingfisher is sat in second place with an NSP of 6.76% and Hargreaves Lansdown is on 6.14% in third.
Nine of the top twenty stocks are consumer discretionary ones and the majority of those are truly directly consumer facing business (Although Keywords Studios is classified as such it does not sell to consumers directly) suggesting a lack of confidence in the ability and desire of consumers to spend discretionary income in the future. Then again two stocks are supermarkets, These are consumer staples stocks. That might suggest short sellers think basket sizes of food and drink will shrink as well, or perhaps shoppers will be trading down from premium products (which I assume command a better margin) to budget alternatives.
The 10 biggest increases in net short position over the last two weeks
Burberry is the stock that short sellers have been building their NSP against the most: it has increased by 2.98%. We have covered the most recent trading update from and and problems with Burberry last month.
The 10 UK stocks whose net short position declined the most over the last two weeks
Pennon has shed the most as short sellers backed of their NSP by 0.83%. There are a few consumer discretionary stocks appearing here as well, so perhaps short sellers are not so pessimistic about the UK consumer. However, since Moonpig‘s share price did fall dramatically through to January last year but has gone up a bit now and seems to be range bound now, perhaps the shorter’s are starting to give up either because they have made a profit already or are tiring of not seeing one develop. Pets at home delivered a trading update that would have disappointed (full year profits likely below expectations) at the end of last month, and its stock price fell sharply, so perhaps short sellers have already had their fill.
DISCLAIMER: James J. McCombie owns shares in Burberry, 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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