Cineworld, Petropavlovsk and Hammerson are the most-shorted UK stocks, according to ETP provider GraniteShares.
The controversial act of shorting – selling shares with an obligation to buy them back at a (hopefully) lower price – has had mixed success in recent years.
March 2020 was a prolific time for short-sellers as companies nosedived at the start of the pandemic, but since then the strong recovery following the vaccine rollout last year has hit the strategy.
Indeed shares in Cineworld, the world's second-largest cinema chain, fell 75% in a matter of weeks between February and March last year, but since they have regained 41% of their value.
Business was severely shaken during the pandemic with screens shut and blockbusters delayed, but the recent release of No Time To Die – the latest in the James Bond series – has helped to drum up bookings.
Cineworld share price over 5yrs
Source: Google Finance
This has not deterred the sceptics, however, with 9.2% of the firm’s shares currently out on loan by short sellers – the most in the UK.
Will Rhind, chief executive officer at GraniteShares, said: “Shorting stocks is no longer the exclusive pursuit of institutional investors, as sophisticated individual investors are now increasingly doing this.”
He added that US tech stocks had been particularly sought after by short sellers in recent weeks, with Tesla, Uber and Apple among those in the crosshairs.
“Worries about rising interest rates have had an impact on more growth oriented tech names presenting a potential opportunity for some sophisticated investors seeking to take advantage of price declines over recent weeks,” he said.
In the UK, however, it is a familiar list of unloved names that investors are betting will fall. After Cineworld, the next most-shorted UK listed company was Petropavlovsk.
Source: London Stock Exchange
The mining minnow underwent big management changes last year with founder Peter Hambro removed, causing uncertainty. Disappointing volumes in the second quarter also impacted the firm.
Real estate owner Hammerson is another investors have backed to fall. The firm recently underwent a strategic review as the pandemic caused many businesses to close their offices and shops during the pandemic, hitting Hammerson’s rental yield.
Payments firm Network International Holdings, and engineering firm Wood Group (John) round out the top five. The three stocks have short positions of 6.3%, 4.6% and 4.6% respectively.