UK investors have been betting heavily against the consumer sector over the last few months, according to new analysis from legal firm Linklaters. The research shows that Britains consumer sector, which includes high street retailers, restaurants and manufactures of retail goods, has consistently been the most shorted stock.
According to the firms analysis there was a 66 per cent rise in short positions in consumer companies between the beginning of 2015 and the end of 2017 when 32 per cent of all short positions were in consumer companies. Meanwhile, the first couple of months of 2018 have seen this increase to 34 per cent of all shorts.
“Shorting is, in essence, a method of making money from what you believe to be a stock that is about to decline,” said Richard Hodgson, restructuring and insolvency partner at Linklaters. “Given the cyclical nature of retail and consumer, its no surprise that consumer companies have consistently been most shorted, but the sheer volume of short position reporting gives a clear indication for how things might develop in the sector in the coming months.”
The Linklater research comes in the wake of a report from accountancy firm BDO which showed that UK high street was hit with the second worst like-for-like sales on record in March, due largely to heavy snowstorms that kept consumers at home and out of stores. The research also showed that year-on-year sales dropped by 10.1 per cent for the month.