Hedge funds are betting that big-name retailers’ share prices will fall as the industry faces continued tough conditions.
Such funds have bet £1.6bn against retailers including B&Q owner Kingfisher, food and fashion giant Marks & Spencer and grocer Morrisons, The Times reported.
Hedge funds make their money by short-selling ‘borrowed’ shares, which they anticipate being able to buy back at a lower price when they are returned to the ‘lender’.
Morrisons was reported be the most shorted retailer – 6.12% of its shares, worth about £300m, are on loan.
The grocer’s share price hit new highs last year but has fallen more recently as growth fell back.
Kingfisher shares worth about £240m are out on loan at the moment. The direction of the DIY giant is uncertain following the arrival of new chief executive Thierry Garnier who is charged with restoring Kingfisher’s fortunes.
About 3.8% of M&S’s shares, worth £165m, are out on loan. That is a much lower proportion than was the case a year ago, when 16% of the retailer’s shares were controlled by short-sellers according to IHS Markit data.
M&S is in the midst of a turnaround push overseen by chief executive Steve Rowe and chair Archie Norman, and there have been signs of progress at the food business.
Other retailers whose shares are being shorted include Pets at Home and Asos.
About 4% of Asos shares, worth about £105m, are in the hands of hedge funds.
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