BOO, KGF, AO., WINE, AML: 5 most shorted FTSE stocks

Highlights

• The inflationary pressure makes more Britons restrict their purchases to only essential items and push away from buying non-essential items and luxury goods.
• Many hedge funds and investors are short-selling stocks of companies like Boohoo, AO World and Aston Martin, etc. that operate in luxury goods and non-essential segments.

The rising inflation and cost of living crisis in the United Kingdom after the Covid-19 pandemic has adversely impacted the living standards in the country. The annual inflation rose to 6.2% in February 2022, the highest level since March 1992, mainly due to a rise in the cost of energy and food.

The inflationary pressure is making more Britons restrict their purchases to only essential items and push away from buying non-essential items like furniture, electronic goods, clothes, and luxury items like cars.

As a result, many hedge funds and investors are short-selling stocks of the companies like Boohoo Group Plc, Aston Martin Lagonda, Kingfisher Plc, and many others that operate in luxury goods and non-essential segments as these companies might report lower revenue and profitability because of falling consumer demand.

In addition, they are exposed to rising input costs of raw materials and employee wages. However, these firms have limited scope to pass on high input costs to consumers due to intense competition amongst brands and a decline in consumer demand, which is another key reason these companies are witnessing a build-up of a short position by hedge funds.

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Let us look at 5 FTSE listed stocks that are witnessing short position build-up:

Boohoo Group Plc (LON: BOO)

The online fashion retailer market and sells clothes and fashion accessories. It has operations in the UK, European Union, the United States, and other countries.

The company saw a net sales growth of 14% and solid trading performance for the financial year ended 28 February 2022. However, the business of Boohoo faces pandemic-related supply chain pressure and rising input costs. As a result, the company’s 5.55% shares are out on loan to short-sellers at present.

Kingfisher Plc (LON: KGF)

FTSE100 listed company operates more than 1,380 stores across eight countries that offer home improvement products and services.

For the financial year ended 31 January 2022, the company reported a 6.8% rise in revenue to £13,183 million. However, Kingfisher’s first-quarter sale for FY 22/23 till 19 March 2022 was down by 8.1%. Also, the company forecasts lower profits in FY 22/23 amid rising inflationary pressure. Hence, around 4.1% of the company’s shares are in a short position.

Related Read: Top 10 most shorted FTSE stocks in February 2022

AO World Plc (LON: AO.)

The consumer electronics company market and sells domestic appliances and electronic products in the UK and Germany.

AO World’s business reported a 14% decline in revenue for the third quarter ended 31 December 2021, mainly due to the rise in competition in the online electronics market and supply chain constraints. At present, around 4.5% of the company’s shares are in a short position.

Naked Wines Plc (LON: WINE)

The company is engaged in the retailing business of wines and high-end spirits in different parts of the world. Although, the company reported some revenue growth for the 26 weeks ended 27 September 2021.

However, the business of Naked Wines witnessed a decline in new customer sales. The rising inflationary pressure might lead to a fall in consumers demand, impacting the company’s revenue and profitability. Investors have taken a short position on 4.38% of the company shares at present.

Aston Martin Lagonda Global Holdings Plc (LON: AML)

The company operates in the luxury sports car segment. The company’s stocks saw a build-up of 3.7% in short sell positions as investors anticipate lower consumer demand for high-end cars because of inflation. However, Aston Martin anticipates 8% growth in core volume and anticipates £2 billion in revenue in the medium-term by 2024/25.