Short sellers are netting a fortune these days.
According to the FCA net-short disclosure data (available here), the top 10 most shorted stocks in the LSE are:
- Thomas Cook
- Metro Bank
- Kier Group
- Wood Group
- Babcock International
- Arrow Global
Thomas Cook (TCG) collapsed into administration this week giving the short-sellers massive gains.
Metro Bank (MTRO) share price plunged 30% earlier this week as the company failed to pull off a £250m of “senior-non preferred bonds” sale. Investors fear that the bank’s capital buffer is wearing thin. New lows for its shares look likely (see Featured Chart).
Pearson plc (PSON), featured ninth on the list, also slumped this week as it disclosed that sales of its education material are below expectations. Prices immediately dived to 52-week lows (see below). The massive gap down suggests this is unexpected and there will be lots of ‘stale bull’ above 800p ready to sell.
For Kier (KIE), its share price is in a terrible shape too. Prices rebounded recently but that rebound failed to lead to a sustained recovery (see below). Prices dived back into its 100p level. With its long-term price trend still sitting at 90% below the 2018 peak, few investors are brave enough to dip into the stock unless some good fundamentals start emerging.
One stock hurting short sellers is Babcock International (BAB), which broke out to new long-term highs recently. The stock is making a nice base recovery pattern and looks set to test the 600p resistance. Watch for some short reduction as prices appreciate further.
Jackson has over 15 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world’s largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.