Consumer discretionary emerged as the most targeted sector for short sellers in Europe, said Graniteshares, a global issuer of exchange traded products that manages over $4bn in assets, in a press release issued on 9 May 2024. The report is based on short selling trends across European stock exchanges as of 1 May 2024.
Approximately a quarter, or 24 out of 100, of the most shorted stocks listed on major European exchanges belonged to the consumer discretionary sector, encompassing non-essential goods and services. Notably, within this sector, Scandic Hotels Group, a prominent hotel chain operating in the Nordic countries, attracted significant short interest. Graniteshares noted that the short interest in Scandic Hotels Group surged to 14.4%, up from 3.1% recorded a year earlier.
The analysis takes into account net relevant short positions, adhering to regulations in the European Union where short-sellers are required to disclose net short positions to the market. For instance, when a net short position reaches 0.5% of the issued share capital of the concerned company, short-sellers must notify the market, and subsequently at each 0.1% increment thereafter.
The research highlighted that the United Kingdom exhibited the highest short exposure among the main stock exchanges in Europe. Out of the 100 most shorted stocks, 22 were listed in the UK, closely followed by Germany with 21, Sweden with 17 and France with 13. Luxembourg was not covered by the survey.
Other sectors
Following consumer discretionary, the industrials sector held the second highest short exposure in Europe, with 18 net short positions identified. Notably, Irish paper-based packaging company, Smurfit Kappa, witnessed a notable increase in short interest, climbing to 14.85% from 2.54% recorded a year ago. The energy sector ranked third in terms of short selling activity, with European short sellers targeting both alternative energy stocks and traditional oil, gas and coal companies. The technology sector followed closely behind, accounting for 14 short positions, with Atos emerging as the most shorted company in Europe. According to the report, ten investment firms collectively held a 16.76% short position in Atos, marking a significant increase of 12.79% compared to the previous year.
Commenting on the findings, Will Rhind, founder and CEO of Graniteshares, attributed the heightened interest in shorting European listed companies to the challenges posed by the current geopolitical and macroeconomic environment. Rhind noted that while bearish sentiment prevailed particularly in consumer discretionary stocks, institutional investors were betting against a diverse range of sectors.