Short-selling activity in UK-listed companies reached record levels during the first half of 2026, with hedge funds expanding their focus beyond small-cap stocks to target larger companies across multiple sectors, according to new research from law firm White & Case.
The analysis found that 27 UK-listed companies had disclosed aggregate short positions of at least 5% as of 6 July, up 35% from 20 companies at the end of the first quarter and more than five times the level recorded during the first half of 2025.
Housebuilder Vistry and building materials group Ibstock recorded the highest levels of disclosed short interest, with aggregate positions of 16% and 13%, respectively.
Consumer companies accounted for the majority of heavily shorted stocks, representing 56% of the total, followed by industrials (22%) and technology companies (11%). The targeted businesses ranged in market value from around £150 million to nearly £10bn, with an average market capitalisation of approximately £2bn.
According to White & Case, the figures suggest bearish investors are increasingly targeting established listed businesses rather than concentrating solely on smaller companies.
The report also highlights the growing sophistication of short activist campaigns. While large disclosed short positions do not necessarily lead to public activist attacks, the firm said they can signal increased scrutiny where investors identify concerns over valuation, accounting practices, business models or regulatory risks.
Recent UK examples cited in the report include Viceroy Research’s campaign against Close Brothers Group over its provisions for potential liabilities linked to the UK’s motor finance redress scheme, while airline Wizz Air also attracted short-selling attention following warnings that geopolitical tensions involving Iran could affect its operations.
Globally, White & Case recorded 95 public short activist campaigns during the first half of the year, including 13 across continental Europe. Technology companies accounted for around 30% of campaigns worldwide, with industrials, consumer businesses, healthcare and financial services also frequently targeted.
Common themes raised by activist short sellers included allegations of overvaluation, accounting concerns, fraud, product effectiveness and broader industry challenges.
Patrick Sarch, head of UK Public M&A at White & Case, said the current environment has become increasingly attractive for short-focused investors as pressure on company valuations creates opportunities to identify businesses trading above their perceived fundamental value.
He added that boards should expect more sophisticated campaigns and incorporate short-selling risk into broader governance and risk management processes alongside shareholder activism, regulatory investigations and cyber threats.
The report recommends that listed companies strengthen monitoring of short interest in both their own shares and peer groups, establish clear internal response plans and ensure communication strategies are in place before activist campaigns emerge. It also advises boards to agree governance procedures for assessing short theses, coordinating advisers and determining whether public responses are appropriate.
Despite the increase in activity, White & Case noted that short selling continues to play an important role in financial markets by supporting liquidity, price discovery and market efficiency, while acknowledging that many short positions ultimately prove unprofitable.
