Despite the reopening of many industries post-pandemic which due to the risk of spreading the Covid-19 had been forced to shut or minimise operations (hospitality and airlines for instance), the UK’s second-largest cinema chain Cineworld was the most shorted stock in the country.
Some 8.1 percent of Cineworld stock was held short by investment firms with New Holland Capital holding the largest short position with 2.42 percent of the company’s shares.
Another surprise is that AIM favourite BOOHOO is the UK’s second most shorted stock (as of 24 March) with 6.4 percent of its stock held short by eight investment firms.
Online appliance retailer AO World was the third most shorted stock with 5.2 percent of its stock held short by 7 firms while housebuilder came fourth in the list with 5.1 percent of its stock shorted by 5 firms.
It seems rising levels of inflation were perhaps the reason that the top three companies were bet against whereas corresponding interest rate hikes may have impacted potential home buyers from taking the plunge to splurge on a property.
The analysis was carried out by US ETP provider Granitehares which also revealed that GLG Partners had by far the most short positions on UK listed companies of any investment firms with 35. This was followed by Marshall Wace, BlackRock Investment Management and Ennismore Fund Management Limited with 23, 21 and 10 short positions respectively.
Will Rhind, founder and chief executive of GraniteShares, said: “Hopes that UK stocks were set for a strong year have evaporated as the war in Ukraine and rising inflation hits confidence and drives volatility across the market.”
“The most popular shorted stocks on the Graniteshares remain some of the largest US technology names, in particular Tesla. With the recent decline in US technology stocks, sophisticated investors may be signalling they expect further price declines.”
A look at a similar report put out by the firm at around the same time last year also had Cineworld as the most shorted stock although this was put down to restrictions put in place during the pandemic. One notably difference between the two different reports is the absence of energy firms in the most recent analysis. Firms such as Tullow Oil and Echo Energy should be benefiting from commodity inflation which some economists have said is running at over 100 percent.
