Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Top 10 most shorted stocks in the UK

Many traders seek out struggling companies and short their stocks in the hopes of making a profit if share prices fall. Here, we unpack the most shorted stocks in the UK and explain how you can trade them.

How to trade the UK’s most shorted stocks

To trade any of the stocks on the ‘UK’s most shorted stocks’ list, you can open a position using a spread bet or CFD. When you go short, you’re speculating that the price of an asset will go down – and if you’re right, you’ll make a profit. If the share price rises, the market is moving against you, which will result in a loss.

If you want to short-sell, you can either use derivative products such as spread bets and CFDs or borrow the stock from a share dealing broker.

With us, you’ll use these financial derivatives with leverage – which means that you’ll only need a small deposit, known as margin, to gain full exposure. While your initial outlay is decreased significantly, both your potential profits and possible losses are magnified to the full value of your trade.

That’s why it’s important to manage your risk properly. Further, using derivative products mean you don’t own the underlying shares, you’re simply speculating on their price movements.

If you borrow the shares, you’ll aim to sell them, then buy them back at a lower price in the hopes of making a profit. Whether you make the profit or not, you’ll have an obligation to return the borrowed shares to the broker.

Most shorted stocks in the UK

  1. Cineworld Group (7.64% short)
  2. Carillion (7.16% short)
  3. Hammerson (6.33% short)
  4. Petropavlovsk (6.24% short)
  5. Petrofac (4.52% short)
  6. John Wood Group (4.48%)
  7. Network International Holdings (4.42% short)
  8. Sainsbury (4.19% short)
  9. Tullow Oil (3.76% short)
  10. Metro Bank (3.49%)

This list was updated according to the data pertinent to 25 August 2021. Note that the most shorted stocks in the UK change daily due to normal stock market fluctuations. For the most recent data, you can visit the FCA short tracker.1

Cineworld Group (7.64% short)

Cineworld Group is the world’s second largest cinema chain, operating in ten countries around the globe. With lockdown in full swing, the firm was among the many that suffered the consequences. Cineworld has moved through the most-shorted UK stocks list, with some of its positions including the top spot in early 2020 and the fifth one in November of the same year. As of August 2021, it’s back at position number one.

Experiencing a share price drop of more than 80% over the first 12 months of the Covid-19 pandemic, the company’s biggest hit came in March 2020, the same month when lockdown started in the UK, when shares fell from around 138p to 37p.

Cineworld is heavily indebted, too, which will add to a slower recovery. Its most recent acquisitions have contributed to its more than £6 billion in debt. Whether it’ll bounce back to a healthy balance sheet and an increased share price will depend mainly on cinema attendance post-Covid-19.

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Carillion (7.16% short)

Carillion was the UK’s second largest construction company when it underwent liquidation in 2018. Leading up to this, the company is said to have had debt of around £1.5 billion. Some setbacks that Carillion was facing included cost overruns – a big contributing factor to this is said to be risky contracts that turned out to be unprofitable.

Having also provided facilities management services, Carillion had over 20,000 employees in the UK alone – part of a global figure of 43,000. With work for the private sector and government contracts still in the works, the company went into compulsory liquidation after failed attempts to save the firm.

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Hammerson (6.33% short)

Retail centre owner Hammerson has been heavily affected by the coronavirus crisis as fewer shoppers stepped foot in physical stores during national lockdowns. The many stores that couldn’t afford their rent affected Hammerson’s income. This is reflected in the business’s share price movements – but shares have been declining long before lockdown, just like most other stocks on this list. Reasons for this include the lower perceived value of retail property and widening losses for the business.

The outlook for Hammerson will most likely depend on what the future looks like for brick-and-mortar retail operations. According to August 2021 reports, the company’s chief executive, Rita-Rose Gagné, said that Hammerson would strengthen its cash balance by selling some of its non-essential assets. This came after the company’s profit increase of 14% in the first six months of 2021 as brick and mortar establishments could reopen their doors for business.3

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Petropavlovsk (6.24% short)

Petropavlovsk is a mining company that operates some of the largest gold mines in Russia. After making a profit of $25.7 million in 2019, the company incurred a loss of almost twice as much - $48.9 million. Petropavlovsk is a FTSE 250 company and its share price did very well in 2020 compared to previous years, which is why it may be surprising that it‘s on the list of most shorted stocks in the UK.

The gold mining firm reported decreased production in the first half of 2021. The company said ’first-half 2021 gold production totalled 195,000 ounces, a decrease of 39% versus 320,600 ounces in 1H 2020'.4

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Petrofac (4.52% short)

The Petrofac share price has been falling since mid-2012, which has made it an obvious choice for short-sellers over the past few years. Reasons for the drop have included rising debt, revenue concerns and fraud investigations.

For 2021, its share price was highest at just over 170p in January (as of 29 August 2021). Even though this has presented the opportunity to go short as the general trend is that the stock price is falling, there’s also been periods of upward movement. Generally, across markets, despite a general price trend in one direction, movement towards the opposite direction often occurs.

The outlook for the energy services company’s share price will depend on whether it can meet shareholder expectations. This includes the company’s commitment to reach net zero emissions and have 30% of its senior roles filled by women by 2030. If it succeeds, there may be light at the end of the stock price tumble tunnel.

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John Wood Group (4.48% short)

John Wood Group, an engineering and consulting company specialising in energy and the built environment, said that it would perform better in the second half of 2021. This came after the company’s year-on-year revenue for the first half of 2021 slumped by 22.9% to $3.2 billion, coupled with a net loss of $11 million for the same period.

At a time marked by planning and implementing the start of the Covid-19 pandemic lockdown, the company’s share price fell from 421p by well over 60% between February and March 2020. Having reached a low of 153p at the time, this steadily increased and reached a high of 359p by early January 2021. This was followed by the overall trend that characterises the most shorted stocks – a continued drop in the company’s share price. For John Wood Group, this trajectory was maintained strongly until July (as of August 2021).

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Network International Holdings (4.42% short)

Network International Holdings (NIH) is a payment solutions company that operates mainly in the Middle East and Africa. Despite its sturdy market cap of more than £2 billion (listed as a FSTE 250 constituent), its shares haven’t fared so well, making it a favourite among short-sellers. As high uncertainty and lockdown kicked off, NIH’s share price declined from 650p by more than 50% between February and March 2020. It hasn’t returned close to that level ever since (as of August 2021).

NIH listed on the London Stock Exchange (LSE) in 2019, so there’s still some uncertainty around the future performance of the stock. With the company’s year-on-year revenue reaching 17% higher in Q1 and Q2 2021, the outlook may be positive depending on whether this kind of performance can be duplicated, or even improved upon.

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Sainsbury’s (4.19% short)

Supermarket groups such as Sainsbury's profited from the global pandemic in some ways, as the demand for groceries and general goods surged. However, the higher cost of doing business during lockdown has impacted the company’s share price. In 2020, the company implemented a cost-cutting plan; including closing deli counters in-store, shutting down stores, and reducing the number of management roles.

Despite the challenges, Sainsbury’s share price has been experiencing a bull market that has stretched over 12 months (as of August 2021). The reason for the company's presence on the top ten most shorted stocks in the UK is probably because there’s a widespread expectation that the peak of its bull run is close ahead. If this is, indeed, the case, it would be ideal for short-sellers, especially if a bear market follows.

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Tullow Oil (3.76% short)

The Tullow Oil share price peaked between 2010 and 2012, but lower demand for fossil fuels and lower oil prices impacted Tullow just as much as it did other oil producers. Further, like many companies across industries, Tullow Oil was affected by the pandemic. Just one example of this is when the firm’s share price dipped to a low of 10.7p as oil prices collapsed in March 2020.

While Tullow Oil’s share price doubled from around 31p in January to 62p in June 2021, traders that took short positions on the company’s stock recently hit the nail on the head as the share price dropped to around 45p in August 2021.

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Metro Bank (3.49% short)

A dismal performance for the Metro Bank share price over a year and a half from March 2018, with its price dropping from 4000p to 180p. Fuelled by increased credibility issues, naturally, this led to a decline in investor confidence.

Reasons behind the prolonged downward movement in price include regulatory investigations, inability to pay commercial loans, reporting errors and later on, the Covid-19 pandemic. Even though Metro Bank hasn’t been able to get anywhere close to its highs of March 2018, its share price has been largely steady since September 2019 compared to its previous bearish performance.

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Short-selling stock examples

Let’s look at some short-selling examples to see how you can use this strategy to try profit from a company’s falling share price.

Shorting stock with spread bets example

If you choose spread betting, you’re simply betting on the direction in which the market will move. Say XYZ shares are trading at $68.5, with a sell price of $68.45 and a buy price of $68.55. You think the XYZ share price will fall, so you go short at $50 per point of movement at the sell price of $68.45.

If the share price goes down

Let’s say the market moves in your favour after two weeks, and the share price drops to $60.5 with a sell price of $60.45 and a buy price of $60.55. You decide to close your trade. You'll get $50 for every point it moved down, which means you’d have made $395 in profit ([$68.45 – $60.55] x $50).

With spread betting, you won’t have to pay any tax on your profits, or commission to open the position. You’ll have to pay funding charges if you keep your position open overnight, however.

If the share price goes up

If the XYZ share price moves against you – in other words, it goes up – you’ll lose $50 for every point the market moves against you. Assume the new share price is $71.5 after two weeks, with a sell price of $71.45 and a buy price of $71.55. If you close the trade at the new buy price, you’ll incur a loss of $155 ([$68.45 - $71.55] x $50) plus any overnight funding charges.

Shorting stock with CFDs example

If you choose CFD trading, you’ll be exchanging the difference in price of the stock from when the position is opened to when it is closed. Let’s say the underlying market price of XYZ shares is $68.5 a share, with a sell price of $68.45 and a buy price of $68.55. You decide to short-sell 100 shares.

If the share price goes down

If the share price moves in your favour after two weeks and goes down to a new underlying price of $60.5, with a sell price of $60.45 and a buy price of $60.55, you’d stand to profit. Suppose you decide it’s time to reverse the trade, so you buy the shares at the new price of $60.55. Your profit on this trade will be calculated as ([$68.45 – $60.55] x 100), which equals $790.

Note that you’ll also need to pay a commission fee, any overnight funding charges, and capital gains tax on your profits.

If the share price goes up

Let’s assume that the market has moved against you after two weeks and is now trading at $71.5 with a sell price of $71.45 and a buy price of $71.55. You decide to close your position. The calculation of your loss is ([$68.45 – $71.55] x 100) which gives you a loss of $310 (in addition to your commission fee, and any overnight charges).

How to use shorting data

You can use shorting data – the details around the most shorted stocks – to identify the companies which investors have the least confidence in. This could be an indication that markets aren’t doing well and share prices might fall (or continue to fall). Every trader should carry out thorough technical and fundamental analysis, including shorting data, before deciding to buy or sell shares.

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Footnotes

1 FCA, 2020
2 BBC, 2018
3 Business Day, 2021
4 MarketWatch, 2021


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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