Liberum analysts have highlighted ASOS, Sainsbury's, Curry’s, Travis Perkins (LSE:TPK), ITM Power, Kingfisher, BooHoo and abrdn as being among the UK’s most shorted stocks.
All featuring in the top ten of Liberum’s list of companies with the most-loaned shares, each has faced difficulty amid the heightened cost of living and uncertain economic environment.
Retail and energy are among the most shorted sectors, where investors sell borrowed shares to buy back at a lower price later, Liberum outlined, adding the companies included in its list were “all susceptible to high volatility”.
“Positive news, or even the absence of negative news, can result in shares spiking as funds cover short positions,” the investment bank added.
ASOS
FTSE250 listed ASOS PLC (LSE:ASC), like many online retailers, has struggled amid squeezed consumer spending caused by the higher prices seen throughout 2022.
Some 7.4% of its shares, £37.7mln, are currently on loan according to Liberum, the highest of the lot.
Post-COVID consumer habits have not helped either, with many people reverting back to physical shopping rather than seeking goods online, previously forced by closures during lockdowns.
“ASOS has had a tough year as the COVID online unwind has combined with all-time low levels of consumer confidence,” said Stifel analyst Caroline Gulliver.
“We see little relief for ASOS heading into 2023,” she added, suggesting “a profit turnaround will be delayed until the 2024 financial year”.
ITM Power
Hydrogen specialist ITM Power PLC (AIM:ITM) saw a difficult end to 2022, with its 2024 forecasts slashed 60% by Jefferies brokers in November due to warranty issues and delayed development of new products.
Its 2023 revenue was predicted to be 12% lower than originally thought by the broker too, helping it into position as the second most shorted stock, at 5.9% or £33.5mln.
ITM’s 2022 revenue guidance is around £23mln to £28mln, but delays had threatened this.
ITM also announced a new chief executive in November, Dennis Schulz, whom it hopes “will help ITM reach its full potential”.
It subsequently delayed its 8 December trading statement.
Kingfisher
Home improvement retailer Kingfisher PLC (LSE:KGF), which owns B&Q and Screwfix, faces £263mln, some 5.8%, worth of its shares currently in short positions.
The FTSE100 listed retailer saw Deutsche bank repeat a ‘buy’ rating in early December, with sales trends being “better than expected” following “the reversal of COVID trends”.
Its first half sales had previously slumped by 30% though, from £677mln in 2021 to £474mln last July.
A more challenging economic environment was blamed, while the company suggested its second half sales were looking more positive.
BooHoo
Online retailer BooHoo has faced similar issues to ASOS - higher prices, lower consumer spending and a loss of customers in a post-lockdown environment.
£23.1mln worth of its shares are in short positions, Liberum outlined, equalling 5.1%.
Downgrading the company from a ‘buy’ to ‘hold’ rating in late December, Gulliver suggested the company would continue to suffer from low levels of consumer confidence in the UK, alongside “numerous macroeconomic headwinds”.
In light of this, “we have concluded that there is neither the profitability nor cash flow in the 2024 financial year,” she said.
Abrdn
Investor Abrdn PLC (LSE:ABDN) stands out in the top ten of Liberum’s list as the only company in the financial services sector.
It was among investors which pulled billions of pounds from funds in the retail sector in September, aiding the worst year for equity funds since research began.
£178mln, or 4.7%, of abrdn’s shares are shorted, highlighted Liberum, with the price having fallen 6.2% in the last month.
Travis Perkins
Travis Perkins PLC, a merchant and home improvement retailer, sits as the UK’s eighth most currently shorted business.
Despite boasting “an already strong balance sheet” in October, 4.2% of its stock is currently bet against, worth roughly £80.7mln.
Like other retailers, Travis Perkins has felt the squeeze of reduced spending, particularly in the housing market.
Softening demand for houses due to higher mortgage rates could affect the supplier, but Liberum previously outlined its track record of cutting overheads when needed meant it was set to “weather the storm".
Curry’s
Curry’s PLC faced trouble without a strong performance over the Christmas period, warned Hargreaves Lansdown, reflected by short positions worth £25.3mln in the company, or 4.2% of its shares.
Its offering of expensive items saw it face struggles in 2022 as consumers looked to cut spending on pricier goods and went to cheaper competitors, the broker outlined, after lowering profit forecasts for 2023, 2024 and even 2025.
Curry’s had issued a profit warning earlier in December, suggesting figures would likely sit between £100mln to £125mln, rather than the originally forecast £125mln to £145mln.
Sainsbury’s
£212.4mln worth of Supermarket J Sainsbury PLC (LSE:SBRY) shares are currently shorted by just three funds, marking 4.2% of the total value.
One of the UK’s largest supermarkets, Sainsbury’s has had to adapt to shift consumer demand, forced along by increased prices.
According to Hargreaves Lansdown, better valued offerings in its stores had been a success for Sainsbury’s.
Easing inflation may also aid supermarkets, according to Goldman Sachs (NYSE:GS), while investors will be keeping an eye on how Sainsbury’s fared during the Christmas period when it reports on 11 January.