Shorting a stock refers to the process where an investor borrows a stock and sells it, with the aim of buying it back at a lower price. It’s a transaction that will be profitable if the share price falls. The net short position refers to the sum of all the individual shorts of the particular stock. An investor might have this focus based on the potential for poor earnings or as protection against a falling market. Here are the current most shorted London Stock Exchange (LSE) shares to take note of.
The list in full
- ITM Power (LSE:ITM) has a net short position of 4.57% (that percentage of its free-floated shares are shorted). This makes it the most shorted stock on the list. Despite a lot of optimism around renewable energy stocks, the share price has dropped by 54% over the past year. Part of this is associated with the accounting problems it’s experiencing.
- Kingfisher (LSE:KGF) is second on 4.49%. After the pandemic boom, financials have been tapering off for the FTSE 100 member. The 2022 full-year results showed a 39.3% fall in statutory pre-tax profit versus the previous year.
- Keywords Studios (LSE:KWS). The AIM-listed stock provides technical and creative services for clients. The decline in the share price this year comes partly from concerns around the impact of artificial intelligence (AI) on the company. The net short position is currently 4.13%.
- Naked Wines (LSE:WINE) has a net short position of 3.63%. The overhaul and cost-cutting drive announced in Q4 of last year is under way, but short-term pain is hampering the share price so far this year.
- Hargreaves Lansdown (LSE:HL) is a retail investing platform based in the UK. It has lost ground recently as other players have tried to push into its wealth management sector. The net short position is 3.46%.
- Dg Innovate (LSE:DGI) has seen the share price collapse in the past year. The company now trades as a penny stock with a market cap of just £5.12m. It announced plans to reorganise capital and fundraise last month. The net short position is 3.4%.
- Hammerson (LSE:HMSO) is listed on the FTSE 250. The property developer has a net short position of 3.34%. The cyclical nature of the property market means that it usually struggles during a down period such as the UK economy is currently in.
- Cineworld Group (LSE:CINE) has a net short position of 3.29%. The problems of the pandemic have been well documented, with lingering doubts about the future of the company. This is reflected in the amount of short interest.
- boohoo group (LSE:BOO) is a fast fashion online retailer. Over the past couple of years it has been hit by scandals, high cost inflation and thin profit margins. These factors and more are why the net short position stands at 3.26%.
- Sainsbury J (LSE:SBRY) rounds off the top 10 with a net short position of 3.24%. Record high grocery inflation has negatively impacted the business, but the 27% jump in the stock over the past year means short sellers need to be careful.
