Investors remain cautious on the European retail sector, though Next PLC (LSE:NXT) and Tesco PLC (LSE:TSCO) continue to rank among the most crowded long positions in the industry, according to UBS.
The bank's latest 'crowding' analysis found overall positioning among institutional investors in retail remains negative, with the sector described as "short skewed" relative to the wider European market.
Tracking changes in where investors are concentrated can help identify stocks vulnerable to sharp moves following company updates.
Among retailers, Next was the most crowded long position in UBS's coverage universe at the end of May, followed by Tesco and Inditex, owner of Zara. UBS said all three rank among the most heavily owned retail stocks in Europe.
At the other end of the spectrum, Associated British Foods PLC (LSE:ABF) and ASOS PLC (LSE:ASC) remained among the most crowded short positions, indicating investors continue to bet against the shares.
The bank said positioning in food and fashion retailers had become more negative over the past month, while sentiment towards hardline retail stocks improved modestly.
Kingfisher PLC (LSE:KGF) and Dunelm Group PLC (LSE:DNLM) both saw more positive positioning compared with a month earlier.
UBS said crowding data can be useful in assessing risk around earnings announcements, highlighting which stocks could face selling pressure if results disappoint and which heavily shorted names may be vulnerable to a short squeeze if performance exceeds expectations.