Investors pile into bets against Cineworld as it tops list of most shorted stocks
Investors have piled into bets against UK cinema firm Cineworld to make it the UK’s most shorted company, new data has revealed.
The world’s second largest cinema operator topped a list of the UK’s most shorted stocks with around 8.1 per cent of its shares held short by five investment firms, according to data from London Stock Exchange analysed by investment platform GraniteShares.
New Holland Capital LLC held the largest short position against the firm with a 2.42 per cent position against the firm.
Short sellers bet against the performance of a firm’s share price, and Cineworld has seen its shares plunge nearly 70 per cent since April last after a difficult 2020 which saw it shutter all of its sites through covid lockdowns.
Analysts at GraniteShares said turbulence in the markets this year had led to a growing number of investors piling into short positions against UK firms.
“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,” said Will Rhind, founder and CEO of GraniteShares.
Cineworld was followed by online retailer Boohoo which has 6.4 per cent of its stock shorted by eight firms.
The Manchester-based retailer has weathered a torrid year which has seen its share price slide 75 per cent from an April peak last year, after governance failings in its supply chain sparked an investor exodus in 2020.
Analysts at Hargreaves Lansdown said bosses were trying to arrest the slide with an “Agenda for Change” but the firm “has some work to do if it wants to regain investors’ trust”.
Electronic retailer AO World was the third most shorted stock with 5.2 per cent held short by investors, while real estate firm Hammerson had 5.1 per cent held short and investors had 4.9 per cent short positions against B&Q owner Kingfisher.
US tech stocks followed a similar trend, GraniteShares said, with investors betting against prices after months of sustained decline.
“The most popular shorted stocks on GraniteShares globally are some of the largest U.S. technology names, in particular Tesla. With the recent decline in U.S. Technology stocks, sophisticated investors may be signalling they expect further price declines.”