Marshall Wace, one of the biggest hedge fund firms in the world, has taken a record short position against NatWest Group PLC (LSE:NWG).
The London-based hedge fund has taken a £155.6mln short, the largest disclosed short position against the bank since records began in 2012.
Latest disclosures to the UK’s Financial Conduct Authority (FCA), show that the fund increased its short selling against the high-street lender last month, bolstering its position to 0.61%.
After falling to around 100p during the pandemic, shares in NatWest have climbed to almost a five-year high above 310p in February this year before retreating to 266.5p on Monday. The shares were up 0.75% today at 268.4p.
Other short bets by Marshall Wace include British Airways owner International Consolidated Airlines and UK fashion house Burberry.
Short selling is when hedge funds or other financial institutions bet that the share price of a stock will fall, meaning the traders holding the short positions will profit as a result.
It works by traders selling the stock first with the intention of repurchasing at a lower price, pocketing the difference.
In common practice, short sellers will ‘borrow’ the shares from an investment bank or other financial institution.
While this is the largest short position held against NatWest, it is still some way off being London's most shorted stock, currently.
That title goes to Ocado, which has more than 6% of its stock on loan to hedge-fund managers, including BlackRock, D1 Capital and Whale Rock Capital Management among others.
Other heavily shorted stocks included online retailer THG PLC (LSE:THG), which has 4% of its stock in short positions, Naked Wines PLC (AIM:WINE, OTCQX:NWINF) at 4% and J Sainsbury PLC (LSE:SBRY) at 3%.