Question: what do Tesco (TSCO), Zoopla Property (ZPLA), Flybe (FLYB) and Glencore (GLEN) have in common? Answer: their shares are all currently shorted by major fund managers. In the past fortnight alone, market-moving short positions have been taken or extended on other FTSE giants including Balfour Beatty (BBY), TSB Banking (TSB) and RSA Insurance (RSA).
From time to time, every traded company will have - though perhaps not know of - a bear short its stock. But whenever a short position is taken in at least 0.5 per cent of a company's shares, a notification must be made to the Financial Conduct Authority, which in turn publishes a daily list of these positions. We have the European Commission (EC) to thank for the legislation underpinning these disclosures. While short-selling enhances market liquidity and efficient pricing in normal markets, in distressed markets the EC contends it can "amplify price falls, leading to disorderly markets and systemic risks".
As well as providing a degree of transparency, the list opens a window on bearish sentiment in a stock. Take Zoopla. Investors are currently unsure of the likely damage to the property website from the recent entrance of estate agent-owned competitor On The Market, which asks its members to delist from at least one of the 'big two' online players - the other being Rightmove (RMV). Four fund managers - Tremblant Capital, BlackRock Investment Management, Ennismore and GLG Partners - clearly believe the pain Zoopla detailed in its accounts in February will continue, and are short the stock.
Flybe is another interesting case. Its share price crashed in January following a disappointing set of results. The company revealed it had failed to free its balance sheet from a number of costly jets, and would not benefit from the fall in oil prices until at least 2017, because of its hedging policy. Accordingly, GSA Capital Partners and JPMorgan Asset Management concluded the shares will sink further.
The largest net short position currently is a bet by Odey Asset Management against the prospects of a fellow investment manager, the emerging markets-focused Ashmore (ASHM). Odey, which is short 6.45 per cent of Ashmore's outstanding shares, also has large bear positions in Lancashire (LRE), Intu Properties (INTU) and Trinity Mirror (TNI). Given the hedge fund's manager and namesake Crispin Odey is predicting a stock market bloodbath, this information is less revealing than the instances where multiple fund managers have shorted a stock. In some cases this might be an example of sheep in bears' clothing, but consensus is important. For example, as the table of short positions below shows, 10 serious market participants owning 11.5 per cent of Greene King (GNK) think its shares will be worth less than they are today.
In this instance, a wide group of investors clearly has little faith in the company's £774m acquisition of Spirit Pubs. But the disclosures do not explain why these short positions have been taken, or if the short-sellers are waiting for a specific event before cashing out.
Like any investment, not all of these shorts will pay off. Still, with 31 of the constituents in the FTSE 100 on the list, there's a lot of bearish sentiment out there.
Companies most shorted by major fund managers
Source: Financial Conduct Authority, as of 1 April 2015
| Company | Shorters |
| Greene King | 10 - Alpine Associates, AQR Capital, Arrowgrass Capital, BTG Pactual Europe, Carlson Capital, Cheyne Capital, GLG Partners, HBK Investments, PSquared Master SICAV, Sandell Asset Management |
| J Sainsbury | 10 - Adelphi Capital, BlackRock Investment Management, Conatus Capital, Emerging Sovereign Group, Eton Park International, Lansdowne Partners, Lone Pine Capital, Marshall Wace, Odey Asset Management, Pelham Long Short |
| Wm Morrison Supermarkets | 10 - AQR, BlackRock IM, Discovery Capital, Emerging Sovereign, Eminence Capital, JPMorgan Asset Management, Lansdowne, Marshall Wace, Pelham, UBS Global Asset Management |
| Ladbrokes | 9 - AQR, Ardevora Asset Management, BlackRock Institutional Trust, CapeView Capital, Citadel Europe, Pennant Capital, Societe Generale Newedge, Susa Fund Management, TT International |
| Tungsten | 8 - Bogle Investment Management, GSA Capital, Hutchin Hill Capital, JPMorgan, Marshall Wace, Numeric Investors, Oxford Asset Management, Ram Active Investments |
| WH Smith | 8 - Artemis IM, Eminence, FIL Fund Management, FIL Investment Services, Meritage Group, Polar Capital, Public Equity Partners, Scopus Asset Management |
| Carillion | 7 - AKO Capital, BlackRock IM, CapeView, Immersion Capital, Marshall Wace, Och-Ziff Management Europe, Thunderbird Partners |
| Enquest | 6 - CapeView, GLG Partners, Marshall Wace, Oxford, Sothic Capital,TT International |
| Hansteen | 6 - Basso Capital, Citadel, CQS, Ferox Capital, Och-Ziff, Polygon Global |
| Serco | 6 - Altair IM, AQR, BlackRock IT, BlackRock IM, JPMorgan, Marshall Wace |
