Short sellers circle Hargreaves and beleaguered fund groups

Hedge funds have been adding to their shorts against Hargreaves Lansdown and fund groups like Abrdn and Jupiter, which have been battered by volatile markets this year.

Hargreaves was the fourth most shorted UK stock by the end of August, just behind fast fashion retailers Boohoo and Asos and B&Q owner Kingfisher. Eight investors had bets against the D2C platform, including hedge funders AQR and Marshall Wace, taking the total percentage of stock held short to 5.7%.

Source: GraniteShares; data from London Stock Exchange on 26 August 2022

But less than a week later, funds from Blackrock and Citadel Advisers Europe have upped their shorts out on the platform group.

Marshall Wace currently has the biggest short position at 1.0%, followed by Kintbury Capital (0.95%), which also topped up its short last week, and Blackrock (0.9%), according to data from the Financial Conduct Authority.

However, the total stock shorted is smaller at 5.3%, with one fund, Point72 Europe (London) LLP, closing its position.

The FTSE 100 platform giant has had a rough time this year, revealing in an update last month that its profits had plunged by nearly a quarter in its last financial year. Its shares have already lost 39% of their value year-to-date.

Against the challenging market backdrop, it has struggled to attract new business, with net inflows down 37% to £5.5bn in 2022 and a 67% drop off in new customers signing up to the platform, compared to the record subscription numbers during the pandemic-fuelled retail trading boom.

This is not the only time Hargreaves has attracted unwanted attention from short sellers. In November 2019, 6.2% of its stock was being shorted as the platform group was grilled over its connections to the Woodford Equity Income fund, which had imploded months before.

Abrdn, Ashmore and Jupiter in the crosshairs

Other beleaguered managers have found themselves caught in the crosshairs of shortsellers.

Abrdn, Ashmore and Jupiter have several funds betting against them, while Man Group and Investec have attracted one naysayer each, according to the most recent disclosures from the FCA.

Emerging markets specialist Ashmore is the 10^th most shorted stock in the UK, with 5.1% of its stock shorted currently, but Abrdn is not far behind, with hedge funds shorting 4.6% of its shares.

Given Ashmore’s focus, many of its funds have been more vulnerable to the fallout from Russia’s invasion of Ukraine. Its shares have fallen 28% this year, though that is better than Abrdn, which has seen 39% of its value wiped.

Jupiter, which has seen its shares plunge 62%, is unsurprisingly another short-selling target. Collectively, BennBridge and GLG Partners had a 1.7% short out on the FTSE 250 manager, though the latter recently reduced its holding by 0.2 percentage points.

Monks IT shorted

Investment trusts have also not been immune to hedge funds betting against them.

In August, shorts were initiated against Hipgnosis Songs Fund, which invests in music royalties, and Tritax Big Box Reit.

The JP Morgan Global Growth & Income trust, which recently merged with the Scottish Investment Trust, was briefly targeted by Millenium Capital Partners, but it closed its position.

On 2 September, Qube Research & Technologies Limited took out a 0.5% short on Monks Investment Trust, run by Baillie Gifford manager Spencer Adair.

All the Edinburgh manager’s funds and trusts have struggled in the anti-growth environment in 2022. Monks has lost 27% this year, but Baillie Gifford US Growth trust, its biggest loser, is down 44%.

See also: Baillie Gifford late stage growth trust enjoys sharp rebound in August