Retail traders across Europe are engaging in a coordinated challenge to hedge funds – including Marshall Wace and Millennium – holding short positions in a handful of European stocks in a tussle reminiscent of the 2021 GameStop saga in the US, according to a report by the Financial Times.
Stocks including Hensoldt, Renk Group, and Eutelsat have surged dramatically in recent weeks, far exceeding the broader defence sector rally driven by increased military spending expectations.
Retail traders, often organising via Reddit forums such as r/Aktien and r/wallstreetbetsGER, have deliberately piled into stocks heavily shorted by hedge funds, including Marshall Wace, Millennium, Qube Research & Technologies, and Darsana Capital Partners, with the coordinated effort triggering significant short squeezes, and forcing hedge funds to cover their positions at mounting losses.
According to S3 Partners, hedge funds lost approximately $187m in mark-to-market losses on Eutelsat as the stock soared nearly 300% over three weeks. Short sellers of Hensoldt saw $110m in losses as shares jumped 40% in the same period.
Even BlackRock, the world’s largest asset manager, had a significant short position in Eutelsat before trimming it below the 0.5% disclosure threshold.
The surge in retail trading volume has been dramatic. Flatexdegiro, a German retail brokerage, reported that trading in Eutelsat shares surged 70x in the past month, while Renk Group trades increased fourfold. UK-based eToro reported an 18x rise in positions opened in Hensoldt.
European retail traders are also framing their activity as a geopolitical statement, rejecting US dominance in financial markets. Some have cited Donald Trump’s erratic tariff policies and his calls for Europe to fund its own defence as motivation to shift investments away from US stocks and asset managers.
Unlike in the US, where short interest is less transparent, hedge funds in Europe and the UK must disclose short positions exceeding 0.5% of a company’s shares. This visibility has allowed retail traders to target funds’ positions more easily, exacerbating their losses.
As a result, hedge funds have scrambled to exit positions to avoid further short squeezes. Eutelsat’s stock surge prompted several firms to rapidly unwind their short bets in other heavily shorted small-cap names, according to Aleksander Peterc, head of small- and mid-caps at Bernstein.
“It rang alarm bells when Eutelsat was squeezed, so hedge funds killed their short positions in other companies too, very quickly,” he said.
