Hedge funds are ramping up their bearish bets on European stocks, with a particular focus on financials, materials, energy, and industrial companies, according to a report by Bloomberg citing data from the prime brokerage unit at Goldman Sachs.
The bankreported that hedge funds were net sellers of European equities for the second consecutive week ending 21 March, extending a broader trend that has seen more short positions than long ones in four of the past five weeks.
The selling pressure has been concentrated in individual stocks rather than broader indices, with hedge funds taking aim at companies in Germany, Italy, the Netherlands, Denmark, and the UK. Among the most heavily shorted sectors were building and construction materials, along with financials – areas that have been particularly vulnerable to macroeconomic headwinds.
In February, asset manager Schroders and home improvement retailer Kingfisher ranked among the most crowded European short positions, according to data from Hazeltree, which tracks hedge fund holdings across 700 asset management firms. Regulatory filings show that hedge funds have since increased their bets against these companies.
Several prominent hedge funds have disclosed new or expanded short positions in March. AKO Capital, Man Group, Kintbury Capital, and Marshall Wace have all placed short bets against Kingfisher, while Kintbury Capital has also opened a short position in Schroders.
Meanwhile, energy services firm Petrofac has emerged as the UK-listed company with the highest proportion of its outstanding shares held in short positions, according to the UK Financial Conduct Authority (FCA). Investment firms Helikon Investments and TFG Asset Management currently hold sizable bets against the company.
Kingfisher, Petrofac, and Schroders all reportedly declined to comment on the short positions, while representatives for Man Group and Marshall Wace also declined to provide statements. AKO Capital, Helikon Investments, TFG Asset Management, and Kintbury Capital did not immediately respond to Bloomberg’s requests for comment.
