Hedge funds have sharply increased their short positions on European equities, reflecting concerns over the economic impact of the ongoing war in Iran, according to a report by the Financial Times citing data from Breakout Point.
The figures show that short disclosures on European-listed stocks approached 12,000 in the first quarter of 2026, marking the highest level since mandatory short disclosure rules were introduced in 2012. These filings, triggered when a short reaches 0.5% of a company’s issued shares, indicate heightened activity rather than individual positions, as funds may adjust holdings multiple times.
“Europe looks increasingly vulnerable in times of crisis,” said Andreas Bruckner, European equity strategist at Bank of America. He noted that the region, previously a beneficiary of global growth trades, now faces heightened exposure to a brewing energy crisis.
Prominent hedge funds including AQR Capital Management and Two Sigma Investments have significantly expanded their bearish positions. AQR’s disclosed shorts in European stocks climbed from 54 last year to 128, while Two Sigma’s rose from three to 85, according to Breakout Point. Analysts note that increased shorting does not necessarily reflect a uniformly negative view, as some funds hedge by holding long positions elsewhere.
Energy price surges are a key factor behind the move. Brent crude has jumped roughly 50% to $110 per barrel since the war began, and the European gas benchmark TTF is up more than 65%, stoking fears of inflation and slower growth. Europe’s reliance on imported energy makes it more exposed than the US. The Stoxx Europe 600 index has dropped over 6% since the conflict erupted, erasing most of its gains for the year.
Among individual companies, London-listed Wizz Air has become Europe’s most shorted stock, with short interest nearly doubling to 15% after the airline warned that Iran-related disruptions and higher fuel costs would wipe out its profits for the year. Rival easyJet has also drawn short-seller attention.
In the UK, funds are targeting companies sensitive to domestic economic conditions. Hedge funds including Citadel and DE Shaw have increased shorts in brickmaker Ibstock, with total short interest now exceeding 12%. The war has amplified concerns about interest rate volatility affecting such sectors.
Emmanuel Cau, head of European equity strategy at Barclays, highlighted the UK as “a consistent focus for short sellers,” noting that the conflict has renewed worries about energy costs, consumer pressure, and the broader cost-of-living crisis.
Technology stocks have not been immune. Video game developer Ubisoft Entertainment, known for its Assassin’s Creed franchise, became one of Europe’s most shorted names following a corporate restructuring and delays in game releases.
The FT’s attempts to reach AQR Capital Management, Two Sigma Investments, Citadel, and DE Shaw for comment were reportedly unsuccessful.
