The trading update from Kier Group PLC (LON:KIE) last Friday, which pushed its shares 3% higher, represented a small victory for investors in the civil engineer, which is heavily involved with London’s £15bn Crossrail transport project.
However, it acted as a poke in the eye to the most recently-arrived of the speculators betting against its success. For Kier is the City’s most shorted stock.
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A quick refresher - short-selling is effectively a bet that the share price will fall, rather than rise.
For most long-only investors, this strategy instinctively feels wrong.
But experts will tell you it is a legitimate method of balancing or mitigating risks within an equity portfolio.
The approach gained notoriety during the banking crisis when the hedge funds had a field day.
According to data published by Castellain Capital, the ‘shorters’ started building their positions in January, which, coincidentally, was the month debt-laden construction group Carillion was liquidated.
Since then Kier shares have lost around 22% of their value, so some of the early short sellers will undoubtedly have made cash.
Unsurprisingly, the retailers are also in the cross-hairs of short-sellers.