Industrials stocks topped the ‘most-shorted’ rankings in August, ending the month accounting for 22.98% of total short activity in Europe, having reached their highest level in two years on 18 August at 26.57%, according to latest monthly pan-European short position data from SEI Novus.
- Bridgewater Associates held four of the five largest short positions at the end of August (Iberdrola, Bayer Aktiengesellschaft, Adyen NV, and Intesa Sanpaolo) with Citadel Investment Group (Infineon Technologies) rounding out the top five
- Stocks behind manufacturing and logistics and essential goods (consumer staples) have shown strong increases in short-trading activity
- The UK retains the greatest short exposure among European countries at 23.46% with Germany in second place on 21.83%
Industrials stocks topped the ‘most-shorted’ rankings in August, ending the month accounting for 22.98% of total short activity in Europe, having reached their highest level in two years on 18 August at 26.57%, according to latest monthly pan-European short position data from SEI Novus.
With both households and businesses expected to tighten their belts over the coming months, managers seem to have decided that industrial stocks responsible for manufacturing and logistics are at greatest risk from the unfolding downturn.
The aggregated data set, which covers over €30 billion in short positions held by more than 150 managers, also reveals that second spot was filled by consumer discretionary stocks which accounted for 18.85% of registered European short positions. Communication services meanwhile, ended the month accounting for 5.39%, a continued decline since hitting their highest level of 15.61% in January 2022.
The number of overall short positions declined to 452 on 31 August, from the 483 record in the previous month.
The four largest short positions in the last week of August (29 August to 2 September) were registered by Bridgewater Associates Inc with Iberdrola SA – the Spanish multinational electric utility company – accounting for 1.42%, Bayer Aktiengesellschaft – German multinational pharmaceutical and biotechnology company – accounting for 1.12%, Adyen NV – the Dutch payment company) accounting for 1%, and Intesa Sanpaolo spa – the Italian international banking group – accounting for 0.72%
The fifth largest short position was held by Citadel Investment Group, whose bet against German seminconductor manufacturer Infineon Technologies AG accounted for 0.71% of the total.
Bridgewater Associates was also the manager with the greatest short exposure in August, accounting for 16.34% of registered short positions, followed by Marshall Wace with 15.33% and BlackRock Institutional Trust Company at 8.26%.
The top seven most shorted European stocks by size, as a proportion of all registered European short positions and as of 31 August were: ASML Holding NV, 4.4%; Rentokil Initial PLC, 2.5%; C&C Group PLC, 2.5%; Kingfisher PLC, 1.8%; Allianz SE, 1.6%; Arcelormittal SA, 1.6%; and Koninklijke Philips NV, 1.6%.
Irish drinks company, C&C Group PLC, has consistently been among the top five most shorted stocks since June 2022.
The top three countries with the greatest short exposures were the United Kingdom with 23.46% (up from 22.6% in July), followed by Germany with 21.83% (a decline from 22.18% in July) and Sweden with 10.89%.
The United Kingdom and Germany have both consistently been among the top 2 countries with the greatest short exposures since February 2022.
Key takeaway | Expected ‘belt-tightening’ on the part of both businesses and households which could hit the manufacturing and retail sectors, has seen shorting activity in industrial stocks hit its highest level in two years. Is there more to come?
