Top 10 most shorted stocks in the UK

How to use shorting data

You can use shorting data – the details around the most shorted stocks – to identify which companies investors have the least confidence in. This could be an indication that markets aren’t doing so well and share prices are in for a fall. Every trader should do thorough technical and fundamental analysis before deciding to buy or sell shares, and using shorting data should form part of this analysis.

When you go short, you are ultimately speculating that the price of an asset will go down. It is a strategy you can employ to profit if a company’s share price falls. If you want to short-sell, you can either borrow the stock from a share trading broker or you can use derivative products, including CFDs.

If you borrow the shares, you will aim to sell them then buy them back at a lower price in the hopes of making a profit. Either way, you will have an obligation to return the borrowed shares to the broker. With CFDs, you do not own the underlying asset. You are simply speculating on the price movements of the asset.

Most shorted stocks in the UK

1. Metro Bank
2. Arrow Global Group
3. Jupiter Fund Management
4. Marks & Spencer Group
5. AA
6. Anglo American
7. John Wood Group
8. Pearson
9. Ultra Electronics Holdings
10. IQE¹

This list was updated on 9 May 2019, but the most shorted stocks in the UK change daily due to normal stock market fluctuations. For the most recent data, you can visit the FCA short tracker.

Metro Bank (12.5% short)

Look at a chart of the Metro Bank share price and it’s no surprise that 12.5% of its available stock was being shorted on 9 May 2019. A rapid decline in the share price since March 2018 – due to increased credibility issues – has made for great shorting opportunities.

In January 2019, Metro Bank revealed that it didn’t have enough capital to pay some of its commercial loans, and this led to a massive share price decline of 35% in one day. February 2019 saw another plunge due to announcements around a plan to fix its balance sheet shortfall. This drove stocks to record lows and has the public asking, ‘what next?’.

Metro Bank share price over the past five years

^{Source: London Stock Exchange}

Arrow Global Group (10.9% short)

Arrow Global Group is a major debt collection organisation based in the UK. The value of the group more than doubled between mid-2016 and mid-2017 owing to its positive standing in the market. It continued to enjoy this success until 2018, when changes in management and the lack of cash generation lead to a shocking drop in the share price.

The sharp drop meant the public lost their confidence in the group, but it also meant that some traders saw the opportunity to profit by going short on the stock. Up to 10.9% of the company’s outstanding shares were being shorted on 9 May 2019. However, most traders still choose to go long, as they believe the company’s returns will remain attractive.

Arrow Global Group share price over the past five years

^{Source: London Stock Exchange}

Jupiter Fund Management (9.7% short)

Another company that has a major short interest in its stock is Jupiter Fund Management – a UK group managing equity and bond investments and providing wealth management services. The company has been a favourite for short sellers for a long time, but the short bets have risen drastically despite the share price rising by 11% in January 2019.

Almost 10% of the company’s outstanding shares were being shorted on 9 May 2019. It may be because financial results for 2018 did not meet expectations. The modest performance is attributed to a management change as well as unhappiness over dividends. Traders and investors may also have had certain expectations about Jupiter’s expenses, which may have influenced some short positions.

Jupiter Fund Management share price over the past five years

^{Source: London Stock Exchange}

Marks & Spencer Group (9.3% short)

Marks & Spencer is one of the UK retailers that has experienced severe highs and lows due to its competitors’ varying performance. Dipping share prices may also be a reflection of the reaction to the new chairman appointed in 2017, Archie Norman. Further, sales numbers are under pressure and more store closures are looming as the company tries to cut costs.

Though Marks & Spencer dividends are attractive, traders and investors shouldn’t rule out the possibility of a continued downtrend in the market. Some may already be aware of the stock’s vulnerability, which is why 9.3% of stock was shorted on 9 May 2019. Since the May 2017 high, the share price has been dropping, and sporadic rallies offer new opportunities to short the stock.

Marks & Spencer share price over the past five years

^{Source: London Stock Exchange}

AA (9.1% short)

Like many other companies on the ‘most shorted stocks’ list, AA has been a disappointing performer since listing on the stock market in 2014. It has been plagued by debt and profit warnings, leading to a desperate need to turn the business around.

The most important factor that may have driven traders to short AA stock is the fact that earnings per share went down by 32% and dividends were cut by up to 60%. On 9 May 2019, 9.1% of outstanding shares were being shorted. The company hopes that its new technology focus, particularly its black box telematics offering, will help to reposition the business.

AA share price over the past five years

^{Source: London Stock Exchange}

Anglo American (9.1% short)

Anglo American - the South African mining giant - has operations based in Africa, Europe, Australia, and South and North America. Its stock price took a major knock from May 2014 to January 2016 due to emerging market slowdowns but has seen huge improvements since then.

However, traders and investors might not be so convinced – Anglo American shares still made it to the list of most shorted stocks. Around 9.1% of its shares were being shorted on the market on 9 May 2019, but favourable commodity prices could knock the company off the ‘most shorted’ list in the near future. On the other hand, fears are mounting over a possible takeover by mining tycoon Anil Agarwal. Major changes such as takeovers and changes in leadership could cause a lot of volatility in the share price.

Anglo American share price over the past five years

^{Source: London Stock Exchange}

John Wood Group (8.2% short)

Energy services John Wood Group has had its fair share of issues, ranging from high debt to slow integration of the business following its 2017 merger with Amec Foster-Wheeler. The company claims its 2018 performance was in line with its expectations, but that the market could react with increased volatility due to changing oil and gas prices.

Investors are worried about prospects due to the business selling off assets to cover their debts and generate more cash. Even though Wood Group’s chief executive believes the company is on track to deliver on its growth objectives, the up to 8.2% of short sellers on 9 May 2019 might disagree.

Wood Group share price over the past five years

^{Source: London Stock Exchange}

Pearson (8.2% short)

Pearson is an international publishing house, dogged by tough competition and profit warnings over recent years. Investors are not overly pleased with the publisher since it froze dividends in 2016 and cut pay-outs to 17p per share in 2017. The share price reacted to the negative sentiment over the past five years and more traders started to short Pearson stock. On 9 May 2019, 8.2% of Pearson’s stock was being shorted. Even though there has been a slight price recovery, stock is still down 40% from its all-time high in March 2015.

In 2018, after extensive cost cutting and a restructure, pre-tax profit jumped by 18%, which had some people hoping that the business was starting to improve. Pearson believes real progress will be evident from 2020, as it hinges towards offering software subscriptions rather than one-off purchases. However, even with this plan in place, investors need more convincing after the past few years’ performance.

Pearson share price over the past five years

^{Source: London Stock Exchange}

Ultra Electronics Holdings (8.2% short)

Defence and aerospace company Ultra Electronics Holdings has experienced some problems over the past three years, including tanking profits due to fears about its performance. To make matters worse, the company was being investigated over allegations of corruption. However, results released in March were better than expected, with share prices increasing by 11%.

New chief executive Simon Pryce reinforced investor confidence by committing to add value, increase revenue and reduce debts. Currently, short-sellers are betting heavily against the company – a total of 8.2% of the stock was being shorted on 9 May 2019.

Ultra Electronics Holdings share price over the past five years

^{Source: London Stock Exchange}

IQE (7.9% short)

IQE manufactures advanced technology for various applications. IQE shares were once highly sought after due to it being a supplier of Apple components, but poor iPhone sales lead to the company being rocked by a profit warning in November 2018. This was followed by worrying financials in March 2019 – with operating profit slumping by 40%.

Nearly 8% of available shares were being shorted on 9 May 2019, and it won’t come as a surprise if this number starts to rise. The company is trying to stage its problems as ‘temporary’, but it could last much longer into the future if demand for its semiconductor technology does not increase.

IQE share price over the past five years

^{Source: London Stock Exchange}

How to trade the UK’s most shorted stocks

To trade any of the stocks on the ‘UK’s most shorted stocks’ list, you can open a position using a CFD. By opening a short position, you’re saying that you think the share price of a company will fall – and if you’re right, you will make a profit. If the share price rises, the market is moving against you, which will result in a loss.

Shorting stock with CFDs

If you choose CFD trading, you’ll be exchanging the difference in price of the stock from when the position is opened to when it is closed. Let’s say the underlying the underlying market price of AA shares is 68.5 a share, with a sell price of 68.45 and a buy price of 68.55. You decide to short-sell 100 shares

If the share price goes down

The share price moves in your favour after two weeks and goes down to a new underlying price of 60.5, with a sell price of 60.45 and a buy price of 60.55. You decide it is time to reverse the trade and you buy ten contracts at the new price of 60.55. Your profit on this trade will be calculated as ([68.45 – 60.55] x 100) and the total is $790.

Just remember that you’ll also need to pay a commission fee and any overnight funding charges.

If the share price goes up

After two weeks, the market has moved against you and is now trading at 71.5 with a sell price of 71.45 and a buy price of 71.55. You decide to close your position by buying 100 shares at a new buy price of 71.55. The calculation of your loss is (68.45 – 71.55) x 100 which gives you a loss of $310 (in addition to your commission fee, and any overnight charges).

If the share price goes down

Let’s say the market moves in your favour after two weeks, and the share price drops to 60.5 with a sell price of 60.45 and a buy price of 60.55. You decide to close your trade – so you buy at the new buy price of 60.55. You will get $50 for every point it moves down, which means you will make $395 in profit ([68.45 – 60.55] x 100).

If the share price goes up

If the AA share price moves against you – in other words, it goes up – you will lose $50 for every point the market moves against you. Assume the new share price is 71.5 after two weeks, with a sell price of 71.45 and a buy price of 71.55. If you close the trade at the new buy price, you will suffer a loss of $155 ([68.45 - 71.55] x 50) plus any overnight funding charges.

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¹ FCA, 2019