5 most shorted FTSE stocks of 2021

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5 most shorted FTSE stocks of 2021

 5 most shorted FTSE stocks of 2021
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Highlights

  • Market participants tend to short-sell those companies whose stock price is expected to fall due to multiple factors like low earnings and other external economic reasons.
  • Short sellers pay charges to borrow shares of a specific company, sell them immediately and aim to buy back at lower prices to gain from the transaction.

The UK stock market provides investors with a platform to make a high return on investment using different strategies like buy and hold investment, investing in growth or value stocks and many other strategies. One such strategy that traders and many newcomers in the market use is short selling.

Market participants tend to short-sell those companies whose stock price is expected to fall due to multiple factors related to the company like low earnings, risky financial position, or any other external economic reason. Short sellers pay fees to borrow shares of a specific company, sell them immediately and aim to buy back at lower prices to gain from the transaction.

Top Shorted stock of 2021

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Let us look at FTSE listed stocks that were most shorted in 2021 and the reason behind that:

1.      Cineworld Group Plc (LON: CINE)

FTSE250 listed company operates the chain of cinema halls in different countries. The stock has been most shorted as lockdown led to the closure of cinema halls, adversely impacting the company’s revenue and profitability. Moreover, the rise of digital streaming services and the direct release of movies online is creating a new trend in the entertainment industry that might be unfavourable for traditional businesses like Cineworld Group Plc. Hence, the company’s stock was heavily shorted by the sellers. As of 3 December, around 9.40% of the company’s shares were in a short position.

2.      Hammerson Plc (LON: HMSO)

The company manages the physical retail shopping centres in the UK. However, the Covid-19 related restrictions in the country led to the closure of physical stores and low footfall in the shopping centre, which resulted in low rental revenue for the company, adversely impacting the company’s share price. As a result, the company’s stock has been on the short-sellers radar since the start of the pandemic. As of 3 December, around 6.20% of the company’s shares had short position.

3.      Petropavlovsk Plc (LON: POG)

The company does the exploration and production of gold. Its key mining assets are in Russia. The stock witnessed short selling due to internal issues within the company. The shareholders’ disagreements with the co-founder and CEO of the company, Pavel Maslovskiy, was one of the reasons for the rise in short selling in the stock. The CEO was later removed by the shareholders at its AGM last year. Still, the company’s stock continues to remain on the short seller radar. As of 3 December, over 6.90% of the company’s shares were in a short position.

4.      Network International Holdings Plc (LON: NETW)

The company operates in the digital transaction processing segment, offering its services to the Middle East and African countries. The company reported a 16.5% rise in revenue at USD 156,382 in the six months ended 30 June 2021, while its stock has given a negative return of 15% on a year-to-date basis to its shareholders. However, despite revenue growth, the company’s stocks are being heavily shorted. As of 3 December, traders had shorted over 4.60% of the company’s share, expecting gain from a share price decline.

5.      Alphawave IP Group Plc (LON: AWE)

The company design and sells digital IP solutions for connectivity. Its key clients are from the semiconductor industry. The company’s business reported strong bookings in the third quarter at USD23.2 million, including USD21.5 million in license fees and USD1.8 million as future royalties. The company has an optimistic growth outlook for upcoming quarters based on high demand from North America. Despite the positive outlook, around 4.30% of shares are in a short sell position, as of 3 December.

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