There have also been significant reductions to the short positions on emerging market fund managers and some of the tech stocks most sold off in recent weeks.
All three sectors have been out of favour recently, and the changes in the fund managers’ positions raise the question whether these trends have played out.
Source: Bloomberg
Emerging market fund manager Ashmore is something of an exception, being the most shorted stock on the UK market with 8 per cent of its shares being sold short.
The stock didn’t even appear in the top 10 two months ago, and short positions have been building despite the uptick in the share price in recent weeks.
Ashmore has been a victim of three years of poor performance for the emerging market indices which has hit its shares.
Nevertheless, in recent weeks the stock has staged something of a recovery and is now up 2.57 per cent over 12 months.
Aberdeen Asset Management is up 9.73 per cent over the same time, almost exactly the returns of the FTSE All Share, having seen an even sharper recovery in its share price.
Performance of stocks vs index over 1yr
Source: FE Analytics
In contrast to Ashmore, Aberdeen is slipping rapidly down the most shorted list and now appears only in 25th position, with 3.7 per cent of its shares sold short.
Both stocks are still being shorted by FE Alpha Manager Crispin Odey, although he has reduced his position in Aberdeen in recent weeks.
He is now short 1.29 per cent of the company’s shares, down from 2.01 per cent last month. He still has a short position worth 4.8 per cent of Ashmore.
It is also notable that managers have been reducing their short positions in the mining and materials sectors.
Last month four of the top 10 most shorted stocks were miners: Arian Silver, Lonmin, Petropavlosk and Kazakhmys.
The short position in Petropavlosk has almost halved, falling from 8.26 per cent one month ago to 4.13 per cent today. The stock is now the 20th most shorted stock, down from 7th in March. The others are outside the top 20.
This follows a period in which the miners have actually outperformed. According to data from FE Analytics the FTSE All Share Mining index is up 5.19 per cent year-to-date as the FTSE All Share has lost 0.13 per cent.
Performance of indices in 2014
Source: FE Analytics
The tech sector has seen significant falls in recent weeks, with some analysts warning of a bubble.
There have been some stock-specific stories exacerbated by bearishness on the sector such as online grocer Ocado, which has seen shares fall 36.61 per cent since the end of February.
Fund managers have also been reducing their positions in this stock, with it now down to 33rd place, with just 3 per cent of shares being sold short.
Back in January FE Trustnet reported that 6.8 per cent of its stock was out with the short sellers.
Blinkx is another tech stock to see a significant drop in the number of its shares being sold short, with the shorters sitting on large profits after the stock tanked following allegations of click fraud.
The company’s shares sold off following allegations by a Harvard Business School professor which the company rebutted in detail last month.
However, professor Edelmann has returned to the fray with a follow-up to his original blog and this story has more to run. The short sellers have largely departed, however, with just 3.8 per cent of the stock being sold short, down from 8.8 per cent last month.
In the tech sector it seems that there is more of a rotation going on, with a number of technology and biotechnology stocks jumping up the list of the most shorted.
Semiconductor manufacturer IQE and Imagination Technologies are among the 10 most shorted stocks while biotech company Physiomics is at number six.
Ladbrokes is the stock to see the biggest jump in short sellers, with a 45 per cent increase in recent weeks.
The stock is suffering after the chancellor increased the duty paid on fixed-odds betting terminals in last month’s budget.
Performance of stocks vs index over 1month
Source: FE Analytics
Ladbrokes has suffered more than its rivals thanks to having less of an online presence and being more geared to physical betting terminals.
