34% of all short positions made against retail sector


Investors in the UK have laid bare their lack of confidence in the retail sector over the last few months with short sells against the sector skyrocketing.

According to new data from legal firm Linklaters, there has been a 66 per cent rise in short positions against high street retailers and retail manufacturers between the beginning of 2015 and the end of 2017.

Short selling is a process where investors make money by betting against stock they expect to decline in value.

The sharp rise in short sells reveals the growing lack of faith in the retail sector, which is currently facing headwinds from multiple directions leading to numerous big-name retailers like Maplin, Toys R Us, Mothercare, Conviviality and New Look to enter financial straits.

At the end of 2017, 32 per cent of all short positions were against consumer companies.

In the first few months of 2018 this has risen to 34 per cent.

“Given the cyclical nature of retail and consumer, it’s no surprise that consumer companies have consistently been most shorted, but the sheer volume of short position reporting gives a clear indication for how things might develop in the sector in the coming months,” Linklaters restructuring partner Richard Hodgson said.

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